Surplus Line Law
(215 ILCS 5/445)
Sec. 445. Surplus line.
(1) Surplus
line defined; surplus line insurer requirements.
“Surplus line insurance” means insurance on an
Illinois risk of the kinds specified in Classes 2
and 3 of
Section 4 of this Code procured from an
unauthorized insurer after the insurance producer
representing the insured or the surplus line
producer is unable, after diligent effort, to
procure said insurance from authorized insurers.
“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.
“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.
“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.
Insurance
producers may procure surplus line insurance only if
licensed as a surplus line producer under this
Section and may procure that insurance only from an
unauthorized insurer:
(a) that
based upon information available to the surplus line
producer has a policyholders surplus of not less
than $15,000,000 determined in accordance with
accounting rules that are applicable to authorized
insurers; and
(b) that has
standards of solvency and management that are
adequate for the protection of policyholders; and
(c) where an
unauthorized insurer does not meet the standards set
forth in (a) and (b) 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.
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.
(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:
(a)
completing a prelicensing course of study. The
course provided for by this Section shall be
conducted under rules and regulations prescribed by
the Director. The Director may administer the course
or may make arrangements, including contracting with
an outside educational service, for administering
the course and collecting the non-refundable
application fee provided for in this subsection. Any
charges assessed by the Director or the educational
service for administering the course shall be paid
directly by the individual applicants. Each
applicant required to take the course shall enclose
with the application a non-refundable $20
application fee payable to the Director plus a
separate course administration fee. An applicant who
fails to appear for the course as scheduled, or
appears but fails to complete the course, shall not
be entitled to any refund, and shall be required to
submit a new request to attend the course together
with all the requisite fees before being rescheduled
for another course at a later date; and
(b) payment
of an annual license fee of $400; and
(c)
procurement of the surety bond required in
subsection (4) of this Section.
A surplus line
producer so licensed shall keep a separate account
of the business transacted thereunder which shall be
open at all times to the inspection of the Director
or his representative.
The
prelicensing course of study requirement in (a)
above shall not apply to insurance producers who
were licensed under the Illinois surplus line law on
or before January 1, 2002.
(3) Taxes
and reports.
(a) Surplus
line tax and penalty for late payment.
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 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 3.5% of the
gross premiums less returned premiums upon all
surplus line insurance procured or cancelled 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 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 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 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) Bond.
Each surplus line producer, as a condition to
receiving a surplus line producer's license, shall
execute and deliver to the Director a surety bond to
the People of the State in the penal sum of $20,000,
with a surety which is authorized to transact
business in this State, conditioned that the surplus
line producer will pay to the Director the tax,
interest and penalties levied under
subsection (3) of this Section.
(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, 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.
(215 ILCS
5/445.1)
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 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.
(215 ILCS
5/445.2)
Sec.
445.2. Board of Directors.
The Association shall
function through a Board of Directors elected by the
Association members, and officers who shall be
elected by the Board of Directors.
The
Board of Directors of the Association shall consist
of not less than 5 nor more than 9 persons serving
terms as established in the plan of operation. The
plan of operation shall provide for the election of
a Board of Directors by the members of the
Association from its membership. The plan of
operation shall fix the manner of voting and may
weigh each member's vote to reflect the annual
surplus line insurance premium written by the
member. Members employed by the same or affiliated
employers may consolidate their premiums written and
delegate an individual officer or partner to
represent the member in the exercise of Association
affairs, including service on the Association Board
of Directors. The Director shall appoint an interim
Board of Directors for the sole purpose of
conducting an election of Directors. If no Board of
Directors is elected within 90 days after the
effective date of this amendatory Act of 1984, the
Director shall appoint the initial members of the
Board of Directors.
The
Board of Directors shall elect such officers as may
be provided in the plan of operation.
(215 ILCS
5/445.3)
Sec. 445.3.
Plan of Operation.
(1) The
Association shall submit to the Director a plan of
operation and any amendments thereto to provide
operating procedures for the administration of the
Association. The plan of operation and any
amendments thereto shall become effective upon
approval in writing by the Director.
(2) If the
Association fails to submit a suitable plan of
operation within 180 days following the effective
date of this amendatory Act of 1984, or if at any
time thereafter the Association fails to submit
required amendments to the plan of operation, the
Director shall, after notice and hearing pursuant to
Sections
401,
402 and
403 of this Code, adopt and promulgate such
rules as are necessary or advisable to effectuate
the provisions of this Act. Such rules shall
continue in force until modified by the Director or
superseded by a plan of operation submitted by the
Association and approved by the Director.
(3) All
Association members must comply with the plan of
operation.
(215 ILCS
5/445.4)
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.
(215 ILCS
5/445.5)
Sec.
445.5. Immunity.
There shall be no liability on the
part of and no causes of action of any nature shall
arise against the Association, its directors,
officers, agents or employees, or the Director of
Insurance or his representatives for any action
taken or omitted by them in the performance of their
powers and duties under this Act.
(215 ILCS
5/445a)
Sec. 445a.
Domestic surplus line insurer.
(a) A
domestic insurer possessing policyholder surplus of
at least $15,000,000 may pursuant to a resolution by
its board of directors, and with the written
approval of the Director, be designated as a
"domestic surplus line insurer".
(b) A
domestic surplus line insurer may only insure in
this State an Illinois risk procured from a surplus
line producer pursuant to
Section 445 of this Code.
(c) A
domestic surplus line insurer must agree not to
issue a policy designed to satisfy the financial
responsibility requirements of the
Illinois Vehicle Code, the
Workers' Compensation Act, or the
Workers' Occupational Diseases Act. A domestic
surplus line insurer is not subject to the
provisions of Articles
XXXIII,
XXXIII 1/2,
XXXIV,
XXXVIIIA,
Section 468, or Section 478.1 of this Code.
Appendix 1: Classes of Insurance
(215 ILCS 5/4)
Sec. 4.
Classes of insurance. Insurance and insurance
business shall be classified as follows:
Class 1. Life,
Accident and Health.
(a) Life.
Insurance on the lives of persons and every
insurance appertaining thereto or connected
therewith and granting, purchasing or disposing of
annuities. Policies of life or endowment insurance
or annuity contracts or contracts supplemental
thereto which contain provisions for additional
benefits in case of death by accidental means and
provisions operating to safeguard such policies or
contracts against lapse, to give a special surrender
value, or special benefit, or an annuity, in the
event, that the insured or annuitant shall become
totally and permanently disabled as defined by the
policy or contract, or which contain benefits
providing acceleration of life or endowment or
annuity benefits in advance of the time they would
otherwise be payable, as an indemnity for long term
care which is certified or ordered by a physician,
including but not limited to, professional nursing
care, medical care expenses, custodial nursing care,
non-nursing custodial care provided in a nursing
home or at a residence of the insured, or which
contain benefits providing acceleration of life or
endowment or annuity benefits in advance of the time
they would otherwise be payable, at any time during
the insured's lifetime, as an indemnity for a
terminal illness shall be deemed to be policies of
life or endowment insurance or annuity contracts
within the intent of this clause.
Also to be
deemed as policies of life or endowment insurance or
annuity contracts within the intent of this clause
shall be those policies or riders that provide for
the payment of up to 75% of the face amount of
benefits in advance of the time they would otherwise
be payable upon a diagnosis by a physician licensed
to practice medicine in all of its branches that the
insured has incurred a covered condition listed in
the policy or rider.
"Covered
condition", as used in this clause, means: heart
attack, stroke, coronary artery surgery, life
threatening cancer, renal failure, alzheimer's
disease, paraplegia, major organ transplantation,
total and permanent disability, and any other
medical condition that the Department may approve
for any particular filing.
The Director
may issue rules that specify prohibited policy
provisions, not otherwise specifically prohibited by
law, which in the opinion of the Director are
unjust, unfair, or unfairly discriminatory to the
policyholder, any person insured under the policy,
or beneficiary.
(b) Accident
and health. Insurance against bodily injury,
disablement or death by accident and against
disablement resulting from sickness or old age and
every insurance appertaining thereto, including
stop-loss insurance. Stop-loss insurance is
insurance against the risk of economic loss issued
to a single employer self-funded employee disability
benefit plan or an employee welfare benefit plan as
described in 29 U.S.C. 100 et seq.
(c) Legal
Expense Insurance. Insurance which involves the
assumption of a contractual obligation to reimburse
the beneficiary against or pay on behalf of the
beneficiary, all or a portion of his fees, costs, or
expenses related to or arising out of services
performed by or under the supervision of an attorney
licensed to practice in the jurisdiction wherein the
services are performed, regardless of whether the
payment is made by the beneficiaries individually or
by a third person for them, but does not include the
provision of or reimbursement for legal services
incidental to other insurance coverages. The
insurance laws of this State, including this Act do
not apply to:
(i)
Retainer contracts made by attorneys at law with
individual clients with fees based on estimates of
the nature and amount of services to be provided to
the specific client, and similar contracts made with
a group of clients involved in the same or closely
related legal matters;
(ii) Plans
owned or operated by attorneys who are the providers
of legal services to the plan;
(iii) Plans
providing legal service benefits to groups where
such plans are owned or operated by authority of a
state, county, local or other bar association;
(iv) Any
lawyer referral service authorized or operated by a
state, county, local or other bar association;
(v) The
furnishing of legal assistance by labor unions and
other employee organizations to their members in
matters relating to employment or occupation;
(vi) The
furnishing of legal assistance to members or
dependents, by churches, consumer organizations,
cooperatives, educational institutions, credit
unions, or organizations of employees, where such
organizations contract directly with lawyers or law
firms for the provision of legal services, and the
administration and marketing of such legal services
is wholly conducted by the organization or its
subsidiary;
(vii) Legal
services provided by an employee welfare benefit
plan defined by the Employee Retirement Income
Security Act of 1974;
(viii) Any
collectively bargained plan for legal services
between a labor union and an employer negotiated
pursuant to Section 302 of the Labor Management
Relations Act as now or hereafter amended, under
which plan legal services will be provided for
employees of the employer whether or not payments
for such services are funded to or through an
insurance company.
Class 2.
Casualty, Fidelity and Surety.
(a) Accident
and health. Insurance against bodily injury,
disablement or death by accident and against
disablement resulting from sickness or old age and
every insurance appertaining thereto, including
stop-loss insurance. Stop-loss insurance is
insurance against the risk of economic loss issued
to a single employer self-funded employee disability
benefit plan or an employee welfare benefit plan as
described in 29 U.S.C. 1001 et seq.
(b) Vehicle.
Insurance against any loss or liability resulting
from or incident to the ownership, maintenance or
use of any vehicle (motor or otherwise), draft
animal or aircraft. Any policy insuring against any
loss or liability on account of the bodily injury or
death of any person may contain a provision for
payment of disability benefits to injured persons
and death benefits to dependents, beneficiaries or
personal representatives of persons who are killed,
including the named insured, irrespective of legal
liability of the insured, if the injury or death for
which benefits are provided is caused by accident
and sustained while in or upon or while entering
into or alighting from or through being struck by a
vehicle (motor or otherwise), draft animal or
aircraft, and such provision shall not be deemed to
be accident insurance.
(c)
Liability. Insurance against the liability of the
insured for the death, injury or disability of an
employee or other person, and insurance against the
liability of the insured for damage to or
destruction of another person's property.
(d) Workers'
compensation. Insurance of the obligations accepted
by or imposed upon employers under laws for workers'
compensation.
(e) Burglary
and forgery. Insurance against loss or damage by
burglary, theft, larceny, robbery, forgery, fraud or
otherwise; including all householders' personal
property floater risks.
(f) Glass.
Insurance against loss or damage to glass including
lettering, ornamentation and fittings from any
cause.
(g) Fidelity
and surety. Become surety or guarantor for any
person, copartnership or corporation in any position
or place of trust or as custodian of money or
property, public or private; or, becoming a surety
or guarantor for the performance of any person,
copartnership or corporation of any lawful
obligation, undertaking, agreement or contract of
any kind, except contracts or policies of insurance;
and underwriting blanket bonds. Such obligations
shall be known and treated as suretyship obligations
and such business shall be known as surety business.
(h)
Miscellaneous. Insurance against loss or damage to
property and any liability of the insured caused by
accidents to boilers, pipes, pressure containers,
machinery and apparatus of any kind and any
apparatus connected thereto, or used for creating,
transmitting or applying power, light, heat, steam
or refrigeration, making inspection of and issuing
certificates of inspection upon elevators, boilers,
machinery and apparatus of any kind and all
mechanical apparatus and appliances appertaining
thereto; insurance against loss or damage by water
entering through leaks or openings in buildings, or
from the breakage or leakage of a sprinkler, pumps,
water pipes, plumbing and all tanks, apparatus,
conduits and containers designed to bring water into
buildings or for its storage or utilization therein,
or caused by the falling of a tank, tank platform or
supports, or against loss or damage from any cause
(other than causes specifically enumerated under
Class 3 of this Section) to such sprinkler, pumps,
water pipes, plumbing, tanks, apparatus, conduits or
containers; insurance against loss or damage which
may result from the failure of debtors to pay their
obligations to the insured; and insurance of the
payment of money for personal services under
contracts of hiring.
(i) Other
casualty risks. Insurance against any other casualty
risk not otherwise specified under Classes 1 or 3,
which may lawfully be the subject of insurance and
may properly be classified under Class 2.
(j)
Contingent losses. Contingent, consequential and
indirect coverages wherein the proximate cause of
the loss is attributable to any one of the causes
enumerated under Class 2. Such coverages shall, for
the purpose of classification, be included in the
specific grouping of the kinds of insurance wherein
such cause is specified.
(k)
Livestock and domestic animals. Insurance against
mortality, accident and health of livestock and
domestic animals.
(l) Legal
expense insurance. Insurance against risk resulting
from the cost of legal services as defined under
Class 1(c).
Class 3. Fire
and Marine, etc.
(a) Fire.
Insurance against loss or damage by fire, smoke and
smudge, lightning or other electrical disturbances.
(b)
Elements. Insurance against loss or damage by
earthquake, windstorms, cyclone, tornado, tempests,
hail, frost, snow, ice, sleet, flood, rain, drought
or other weather or climatic conditions including
excess or deficiency of moisture, rising of the
waters of the ocean or its tributaries.
(c) War,
riot and explosion. Insurance against loss or damage
by bombardment, invasion, insurrection, riot,
strikes, civil war or commotion, military or usurped
power, or explosion (other than explosion of steam
boilers and the breaking of fly wheels on premises
owned, controlled, managed, or maintained by the
insured.)
(d) Marine
and transportation. Insurance against loss or damage
to vessels, craft, aircraft, vehicles of every kind,
(excluding vehicles operating under their own power
or while in storage not incidental to
transportation) as well as all goods, freights,
cargoes, merchandise, effects, disbursements,
profits, moneys, bullion, precious stones,
securities, chooses in action, evidences of debt,
valuable papers, bottomry and respondentia interests
and all other kinds of property and interests
therein, in respect to, appertaining to or in
connection with any or all risks or perils of
navigation, transit, or transportation, including
war risks, on or under any seas or other waters, on
land or in the air, or while being assembled,
packed, crated, baled, compressed or similarly
prepared for shipment or while awaiting the same or
during any delays, storage, transshipment, or
reshipment incident thereto, including marine
builder's risks and all personal property floater
risks; and for loss or damage to persons or property
in connection with or appertaining to marine, inland
marine, transit or transportation insurance,
including liability for loss of or damage to either
arising out of or in connection with the
construction, repair, operation, maintenance, or use
of the subject matter of such insurance, (but not
including life insurance or surety bonds); but,
except as herein specified, shall not mean
insurances against loss by reason of bodily injury
to the person; and insurance against loss or damage
to precious stones, jewels, jewelry, gold, silver
and other precious metals whether used in business
or trade or otherwise and whether the same be in
course of transportation or otherwise, which shall
include jewelers' block insurance; and insurance
against loss or damage to bridges, tunnels and other
instrumentalities of transportation and
communication (excluding buildings, their furniture
and furnishings, fixed contents and supplies held in
storage) unless fire, tornado, sprinkler leakage,
hail, explosion, earthquake, riot and civil
commotion are the only hazards to be covered; and to
piers, wharves, docks and slips, excluding the risks
of fire, tornado, sprinkler leakage, hail,
explosion, earthquake, riot and civil commotion; and
to other aids to navigation and transportation,
including dry docks and marine railways, against all
risk.
(e) Vehicle.
Insurance against loss or liability resulting from
or incident to the ownership, maintenance or use of
any vehicle (motor or otherwise), draft animal or
aircraft, excluding the liability of the insured for
the death, injury or disability of another person.
(f)
Property damage, sprinkler leakage and crop.
Insurance against the liability of the insured for
loss or damage to another person's property or
property interests from any cause enumerated in this
class; insurance against loss or damage by water
entering through leaks or openings in buildings, or
from the breakage or leakage of a sprinkler, pumps,
water pipes, plumbing and all tanks, apparatus,
conduits and containers designed to bring water into
buildings or for its storage or utilization therein,
or caused by the falling of a tank, tank platform or
supports or against loss or damage from any cause to
such sprinklers, pumps, water pipes, plumbing,
tanks, apparatus, conduits or containers; insurance
against loss or damage from insects, diseases or
other causes to trees, crops or other products of
the soil.
(g) Other
fire and marine risks. Insurance against any other
property risk not otherwise specified under Classes
1 or 2, which may lawfully be the subject of
insurance and may properly be classified under Class
3.
(h)
Contingent losses. Contingent, consequential and
indirect coverages wherein the proximate cause of
the loss is attributable to any of the causes
enumerated under Class 3. Such coverages shall, for
the purpose of classification, be included in the
specific grouping of the kinds of insurance wherein
such cause is specified.
(i) Legal
expense insurance. Insurance against risk resulting
from the cost of legal services as defined under
Class 1(c).
Appendix 2: Fees, Charges and Taxes
ARTICLE XXV
FEES, CHARGES
AND TAXES
(215 ILCS
5/408)
Sec. 408. Fees
and charges.
(1) The
Director shall charge, collect and give proper
acquittances for the payment of the following fees
and charges:
(a) For
filing all documents submitted for the incorporation
or organization or certification of a domestic
company, except for a fraternal benefit society,
$2,000.
(b) For
filing all documents submitted for the incorporation
or organization of a fraternal benefit society,
$500.
(c) For
filing amendments to articles of incorporation and
amendments to declaration of organization, except
for a fraternal benefit society, a mutual benefit
association, a burial society or a farm mutual,
$200.
(d) For
filing amendments to articles of incorporation of a
fraternal benefit society, a mutual benefit
association or a burial society, $100.
(e) For
filing amendments to articles of incorporation of a
farm mutual, $50.
(f) For
filing bylaws or amendments thereto, $50.
(g) For
filing agreement of merger or consolidation:
(i) for a
domestic company, except for a fraternal benefit
society, a mutual benefit association, a burial
society, or a farm mutual, $2,000.
(ii) for a
foreign or alien company, except for a fraternal
benefit society, $600.
(iii) for a
fraternal benefit society, a mutual benefit
association, a burial society, or a farm mutual,
$200.
(h) For
filing agreements of reinsurance by a domestic
company, $200.
(i) For
filing all documents submitted by a foreign or alien
company to be admitted to transact business or
accredited as a reinsurer in this State, except for
a fraternal benefit society, $5,000.
(j) For
filing all documents submitted by a foreign or alien
fraternal benefit society to be admitted to transact
business in this State, $500.
(k) For
filing declaration of withdrawal of a foreign or
alien company, $50.
(l) For
filing annual statement, except a fraternal benefit
society, a mutual benefit association, a burial
society, or a farm mutual, $200.
(m) For
filing annual statement by a fraternal benefit
society, $100.
(n) For
filing annual statement by a farm mutual, a mutual
benefit association, or a burial society, $50.
(o) For
issuing a certificate of authority or renewal
thereof except to a fraternal benefit society, $200.
(p) For
issuing a certificate of authority or renewal
thereof to a fraternal benefit society, $100.
(q) For
issuing an amended certificate of authority, $50.
(r) For each
certified copy of certificate of authority, $20.
(s) For each
certificate of deposit, or valuation, or compliance
or surety certificate, $20.
(t) For
copies of papers or records per page, $1.
(u) For each
certification to copies of papers or records, $10.
(v) For
multiple copies of documents or certificates listed
in subparagraphs (r), (s), and (u) of paragraph (1)
of this Section, $10 for the first copy of a
certificate of any type and $5 for each additional
copy of the same certificate requested at the same
time, unless, pursuant to paragraph (2) of this
Section, the Director finds these additional fees
excessive.
(w) For
issuing a permit to sell shares or increase paid-up
capital:
(i) in
connection with a public stock offering, $300;
(ii) in any
other case, $100.
(x) For
issuing any other certificate required or
permissible under the law, $50.
(y) For
filing a plan of exchange of the stock of a domestic
stock insurance company, a plan of demutualization
of a domestic mutual company, or a plan of
reorganization under Article XII, $2,000.
(z) For
filing a statement of acquisition of a domestic
company as defined in Section 131.4 of this Code,
$2,000.
(aa) For
filing an agreement to purchase the business of an
organization authorized under the Dental Service
Plan Act or the Voluntary Health Services Plans Act
or of a health maintenance organization or a limited
health service organization, $2,000.
(bb) For
filing a statement of acquisition of a foreign or
alien insurance company as defined in Section
131.12a of this Code, $1,000.
(cc) For
filing a registration statement as required in
Sections 131.13 and 131.14, the notification as
required by Sections 131.16, 131.20a, or 141.4, or
an agreement or transaction required by Sections
124.2(2), 141, 141a, or 141.1, $200.
(dd) For
filing an application for licensing of:
(i) a
religious or charitable risk pooling trust or a
workers' compensation pool, $1,000;
(ii) a
workers' compensation service company, $500;
(iii) a
self-insured automobile fleet, $200; or
(iv) a
renewal of or amendment of any license issued
pursuant to (i), (ii), or (iii) above, $100.
(ee) For
filing articles of incorporation for a syndicate to
engage in the business of insurance through the
Illinois Insurance Exchange, $2,000.
(ff) For
filing amended articles of incorporation for a
syndicate engaged in the business of insurance
through the Illinois Insurance Exchange, $100.
(gg) For
filing articles of incorporation for a limited
syndicate to join with other subscribers or limited
syndicates to do business through the Illinois
Insurance Exchange, $1,000.
(hh) For
filing amended articles of incorporation for a
limited syndicate to do business through the
Illinois Insurance Exchange, $100.
(ii) For a
permit to solicit subscriptions to a syndicate or
limited syndicate, $100.
(jj) For the
filing of each form as required in Section 143 of
this Code, $50 per form. The fee for advisory and
rating organizations shall be $200 per form.
(i) For the
purposes of the form filing fee, filings made on
insert page basis will be considered one form at the
time of its original submission. Changes made to a
form subsequent to its approval shall be considered
a new filing.
(ii) Only
one fee shall be charged for a form, regardless of
the number of other forms or policies with which it
will be used.
(iii) Fees
charged for a policy filed as it will be issued
regardless of the number of forms comprising that
policy shall not exceed $1,000 or $2,000 for
advisory or rating organizations.
(iv) The
Director may by rule exempt forms from such fees.
(kk) For
filing an application for licensing of a reinsurance
intermediary, $500.
(ll) For
filing an application for renewal of a license of a
reinsurance intermediary, $200.
(2) When
printed copies or numerous copies of the same paper
or records are furnished or certified, the Director
may reduce such fees for copies if he finds them
excessive. He may, when he considers it in the
public interest, furnish without charge to state
insurance departments and persons other than
companies, copies or certified copies of reports of
examinations and of other papers and records.
(3) The
expenses incurred in any performance examination
authorized by law shall be paid by the company or
person being examined. The charge shall be
reasonably related to the cost of the examination
including but not limited to compensation of
examiners, electronic data processing costs,
supervision and preparation of an examination report
and lodging and travel expenses. All lodging and
travel expenses shall be in accord with the
applicable travel regulations as published by the
Department of Central Management Services and
approved by the Governor's Travel Control Board,
except that out-of-state lodging and travel expenses
related to examinations authorized under Section 132
shall be in accordance with travel rates prescribed
under paragraph 301-7.2 of the Federal Travel
Regulations, 41 C.F.R. 301-7.2, for reimbursement of
subsistence expenses incurred during official
travel. All lodging and travel expenses may be
reimbursed directly upon authorization of the
Director. With the exception of the direct
reimbursements authorized by the Director, all
performance examination charges collected by the
Department shall be paid to the Insurance Producers
Administration Fund, however, the electronic data
processing costs incurred by the Department in the
performance of any examination shall be billed
directly to the company being examined for payment
to the Statistical Services Revolving Fund.
(4) At the
time of any service of process on the Director as
attorney for such service, the Director shall charge
and collect the sum of $20, which may be recovered
as taxable costs by the party to the suit or action
causing such service to be made if he prevails in
such suit or action.
(5) (a)
The costs incurred by the Department of Insurance in
conducting any hearing authorized by law shall be
assessed against the parties to the hearing in such
proportion as the Director of Insurance may
determine upon consideration of all relevant
circumstances including: (1) the nature of the
hearing; (2) whether the hearing was instigated by,
or for the benefit of a particular party or parties;
(3) whether there is a successful party on the
merits of the proceeding; and (4) the relative
levels of participation by the parties.
(b) For
purposes of this subsection (5) costs incurred shall
mean the hearing officer fees, court reporter fees,
and travel expenses of Department of Insurance
officers and employees; provided however, that costs
incurred shall not include hearing officer fees or
court reporter fees unless the Department has
retained the services of independent contractors or
outside experts to perform such functions.
(c) The
Director shall make the assessment of costs incurred
as part of the final order or decision arising out
of the proceeding; provided, however, that such
order or decision shall include findings and
conclusions in support of the assessment of costs.
This subsection (5) shall not be construed as
permitting the payment of travel expenses unless
calculated in accordance with the applicable travel
regulations of the Department of Central Management
Services, as approved by the Governor's Travel
Control Board. The Director as part of such order or
decision shall require all assessments for hearing
officer fees and court reporter fees, if any, to be
paid directly to the hearing officer or court
reporter by the party(s) assessed for such costs.
The assessments for travel expenses of Department
officers and employees shall be reimbursable to the
Director of Insurance for deposit to the fund out of
which those expenses had been paid.
(d) The
provisions of this subsection (5) shall apply in the
case of any hearing conducted by the Director of
Insurance not otherwise specifically provided for by
law.
(6) The
Director shall charge and collect an annual
financial regulation fee from every domestic company
for examination and analysis of its financial
condition and to fund the internal costs and
expenses of the Interstate Insurance Receivership
Commission as may be allocated to the State of
Illinois and companies doing an insurance business
in this State pursuant to Article X of the
Interstate Insurance Receivership Compact. The fee
shall be the greater fixed amount based upon the
combination of nationwide direct premium income and
nationwide reinsurance assumed premium income or
upon admitted assets calculated under this
subsection as follows:
(a)
Combination of nationwide direct premium income and
nationwide reinsurance assumed premium.
(i) $150,
if the premium is less than $500,000 and there is no
reinsurance assumed premium;
(ii) $750,
if the premium is $500,000 or more, but less than
$5,000,000 and there is no reinsurance assumed
premium; or if the premium is less than $5,000,000
and the reinsurance assumed premium is less than
$10,000,000;
(iii) $3,750,
if the premium is less than $5,000,000 and the
reinsurance assumed premium is $10,000,000 or more;
(iv) $7,500,
if the premium is $5,000,000 or more, but less than
$10,000,000;
(v) $18,000,
if the premium is $10,000,000 or more, but less than
$25,000,000;
(vi) $22,500,
if the premium is $25,000,000 or more, but less than
$50,000,000;
(vii) $30,000,
if the premium is $50,000,000 or more, but less than
$100,000,000;
(viii)
$37,500, if the premium is $100,000,000 or more.
(b) Admitted
assets.
(i) $150,
if admitted assets are less than $1,000,000;
(ii) $750,
if admitted assets are $1,000,000 or more, but less
than $5,000,000;
(iii) $3,750,
if admitted assets are $5,000,000 or more, but less
than $25,000,000;
(iv) $7,500,
if admitted assets are $25,000,000 or more, but less
than $50,000,000;
(v) $18,000,
if admitted assets are $50,000,000 or more, but less
than $100,000,000;
(vi) $22,500,
if admitted assets are $100,000,000 or more, but
less than $500,000,000;
(vii) $30,000,
if admitted assets are $500,000,000 or more, but
less than $1,000,000,000;
(viii)
$37,500, if admitted assets are $1,000,000,000 or
more.
(c) The sum
of financial regulation fees charged to the domestic
companies of the same affiliated group shall not
exceed $250,000 in the aggregate in any single year
and shall be billed by the Director to the member
company designated by the group.
(7) The
Director shall charge and collect an annual
financial regulation fee from every foreign or alien
company, except fraternal benefit societies, for the
examination and analysis of its financial condition
and to fund the internal costs and expenses of the
Interstate Insurance Receivership Commission as may
be allocated to the State of Illinois and companies
doing an insurance business in this State pursuant
to Article X of the Interstate Insurance
Receivership Compact. The fee shall be a fixed
amount based upon Illinois direct premium income and
nationwide reinsurance assumed premium income in
accordance with the following schedule:
(a) $150, if
the premium is less than $500,000 and there is no
reinsurance assumed premium;
(b) $750, if
the premium is $500,000 or more, but less than
$5,000,000 and there is no reinsurance assumed
premium; or if the premium is less than $5,000,000
and the reinsurance assumed premium is less than
$10,000,000;
(c) $3,750,
if the premium is less than $5,000,000 and the
reinsurance assumed premium is $10,000,000 or more;
(d) $7,500,
if the premium is $5,000,000 or more, but less than
$10,000,000;
(e) $18,000,
if the premium is $10,000,000 or more, but less than
$25,000,000;
(f)
$22,500, if the premium is $25,000,000 or more, but
less than $50,000,000;
(g) $30,000,
if the premium is $50,000,000 or more, but less than
$100,000,000;
(h) $37,500,
if the premium is $100,000,000 or more.
The sum of
financial regulation fees under this subsection (7)
charged to the foreign or alien companies within the
same affiliated group shall not exceed $250,000 in
the aggregate in any single year and shall be billed
by the Director to the member company designated by
the group.
(8)
Beginning January 1, 1992, the financial regulation
fees imposed under subsections (6) and (7) of this
Section shall be paid by each company or domestic
affiliated group annually. After January 1, 1994,
the fee shall be billed by Department invoice based
upon the company's premium income or admitted assets
as shown in its annual statement for the preceding
calendar year. The invoice is due upon receipt and
must be paid no later than June 30 of each calendar
year. All financial regulation fees collected by the
Department shall be paid to the Insurance Financial
Regulation Fund. The Department may not collect
financial examiner per diem charges from companies
subject to subsections (6) and (7) of this Section
undergoing financial examination after June 30,
1992.
(9) In
addition to the financial regulation fee required by
this Section, a company undergoing any financial
examination authorized by law shall pay the
following costs and expenses incurred by the
Department: electronic data processing costs, the
expenses authorized under Section 131.21 and
subsection (d) of Section 132.4 of this Code, and
lodging and travel expenses.
Electronic
data processing costs incurred by the Department in
the performance of any examination shall be billed
directly to the company undergoing examination for
payment to the Statistical Services Revolving Fund.
Except for direct reimbursements authorized by the
Director or direct payments made under Section
131.21 or subsection (d) of Section 132.4 of this
Code, all financial regulation fees and all
financial examination charges collected by the
Department shall be paid to the Insurance Financial
Regulation Fund.
All lodging
and travel expenses shall be in accordance with
applicable travel regulations published by the
Department of Central Management Services and
approved by the Governor's Travel Control Board,
except that out-of-state lodging and travel expenses
related to examinations authorized under Sections
132.1 through 132.7 shall be in accordance with
travel rates prescribed under paragraph 301-7.2 of
the Federal Travel Regulations, 41 C.F.R. 301-7.2,
for reimbursement of subsistence expenses incurred
during official travel. All lodging and travel
expenses may be reimbursed directly upon the
authorization of the Director.
In the case of
an organization or person not subject to the
financial regulation fee, the expenses incurred in
any financial examination authorized by law shall be
paid by the organization or person being examined.
The charge shall be reasonably related to the cost
of the examination including, but not limited to,
compensation of examiners and other costs described
in this subsection.
(10) Any
company, person, or entity failing to make any
payment of $150 or more as required under this
Section shall be subject to the penalty and interest
provisions provided for in subsections (4) and (7)
of Section 412.
(11) Unless
otherwise specified, all of the fees collected under
this Section shall be paid into the Insurance
Financial Regulation Fund.
(12) For
purposes of this Section:
(a)
"Domestic company" means a company as defined in
Section 2 of this Code which is incorporated or
organized under the laws of this State, and in
addition includes a not-for-profit corporation
authorized under the Dental Service Plan Act or the
Voluntary Health Services Plans Act, a health
maintenance organization, and a limited health
service organization.
(b) "Foreign
company" means a company as defined in Section 2 of
this Code which is incorporated or organized under
the laws of any state of the United States other
than this State and in addition includes a health
maintenance organization and a limited health
service organization which is incorporated or
organized under the laws of any state of the United
States other than this State.
(c) "Alien
company" means a company as defined in Section 2 of
this Code which is incorporated or organized under
the laws of any country other than the United
States.
(d)
"Fraternal benefit society" means a corporation,
society, order, lodge or voluntary association as
defined in Section 282.1 of this Code.
(e) "Mutual
benefit association" means a company, association or
corporation authorized by the Director to do
business in this State under the provisions of
Article XVIII of this Code.
(f) "Burial
society" means a person, firm, corporation, society
or association of individuals authorized by the
Director to do business in this State under the
provisions of Article XIX of this Code.
(g) "Farm
mutual" means a district, county and township mutual
insurance company authorized by the Director to do
business in this State under the provisions of the
Farm Mutual Insurance Company Act of 1986.
(215 ILCS
5/408.1)
Sec. 408.1.
Fee for valuation of life insurance policies. Upon
the effective date of this amendatory Act of 1998,
all actions to collect life insurance policy
valuation fees or to transfer such fees to the
General Revenue Fund from any protest account
established under the State Officers and Employees
Money Disposition Act shall cease and any such
protested life insurance policy valuation fee
payments shall be returned to the taxpayer who
initiated the protest.
(215 ILCS
5/408.2)
Sec. 408.2.
Statistical Services. Any public record, or any data
obtained by the Department of Insurance, which is
subject to public inspection or copying and which is
maintained on a computer processible medium, may be
furnished in a computer processed or computer
processible medium upon the written request of any
applicant and the payment of a reasonable fee
established by the Director sufficient to cover the
total cost of the Department for processing,
maintaining and generating such computer processible
records or data, except to the extent of any
salaries or compensation of Department officers or
employees.
The Director
of Insurance is specifically authorized to contract
with members of the public at large, enter waiver
agreements, or otherwise enter written agreements
for the purpose of assuring public access to the
Department's computer processible records or data,
or for the purpose of restricting, controlling or
limiting such access where necessary to protect the
confidentiality of individuals, companies or other
entities identified by such documents.
All fees
collected by the Director under this Section 408.2
shall be deposited in the Statistical Services
Revolving Fund and credited to the account of the
Department of Insurance. Any surplus funds remaining
in such account at the close of any fiscal year
shall be delivered to the State Treasurer for
deposit in the Insurance Financial Regulation Fund.
(215 ILCS
5/408.3)
Sec. 408.3.
Insurance Financial Regulation Fund; uses. The
monies deposited into the Insurance Financial
Regulation Fund shall be used only for (i) payment
of the expenses of the Department, including related
administrative expenses, incurred in analyzing,
investigating and examining the financial condition
or control of insurance companies and other entities
licensed or seeking to be licensed by the
Department, including the collection, analysis and
distribution of information on insurance premiums,
other income, costs and expenses, and (ii) to pay
internal costs and expenses of the Interstate
Insurance Receivership Commission allocated to this
State and authorized and admitted companies doing an
insurance business in this State under Article X of
the Interstate Receivership Compact. All
distributions and payments from the Insurance
Financial Regulation Fund shall be subject to
appropriation as otherwise provided by law for
payment of such expenses.
Sums
appropriated under clause (ii) of the preceding
paragraph shall be deemed to satisfy, pro tanto, the
obligations of insurers doing business in this State
under Article X of the Interstate Insurance
Receivership Compact.
Nothing in
this Code shall prohibit the General Assembly from
appropriating funds from the General Revenue Fund to
the Department for the purpose of administering this
Code.
No fees
collected pursuant to Section 408 of this Code shall
be used for the regulation of pension funds or
activities by the Department in the performance of
its duties under Article 22 of the Illinois Pension
Code.
If at the end
of a fiscal year the balance in the Insurance
Financial Regulation Fund which remains unexpended
or unobligated exceeds the amount of funds that the
Director may certify is needed for the purposes
enumerated in this Section, then the General
Assembly may appropriate that excess amount for
purposes other than those enumerated in this
Section.
(215 ILCS
5/408.4)
Sec. 408.4.
Receipt and use grants.
(a) The
Department is authorized to accept, receive, and
use, for and in behalf of the State, any grant of
money given to further the purposes of the insurance
laws of this State by the federal government as may
be offered unconditionally or under conditions,
agreements, covenants, or terms that, in the
judgment of the Department, are proper and
consistent with the provisions of subsection (b).
All moneys so received shall be deposited into the
Insurance Producer Administration Fund.
(b) The
moneys deposited into the Insurance Producer
Administration Fund under this Section shall be
accounted for separately and shall be expended,
pursuant to appropriation, only in accordance with
the conditions, agreements, covenants, or terms, if
any, under which they were accepted and must be used
to disseminate and provide insurance related
information or assistance to senior citizens.
(215 ILCS
5/409)
Sec. 409.
Annual privilege tax payable by companies.
(1) As of
January 1, 1999 for all health maintenance
organization premiums written; as of July 1, 1998
for all premiums written as accident and health
business, voluntary health service plan business,
dental service plan business, or limited health
service organization business; and as of January 1,
1998 for all other types of insurance premiums
written, every company doing any form of insurance
business in this State, including, but not limited
to, every risk retention group, and excluding all
fraternal benefit societies, all farm mutual
companies, all religious charitable risk pooling
trusts, and excluding all statutory residual market
and special purpose entities in which companies are
statutorily required to participate, whether
incorporated or otherwise, shall pay, for the
privilege of doing business in this State, to the
Director for the State treasury a State tax equal to
0.5% of the net taxable premium written, together
with any amounts due under Section 444 of this Code,
except that the tax to be paid on any premium
derived from any accident and health insurance or on
any insurance business written by any company
operating as a health maintenance organization,
voluntary health service plan, dental service plan,
or limited health service organization shall be
equal to 0.4% of such net taxable premium written,
together with any amounts due under Section 444.
Upon the failure of any company to pay any such tax
due, the Director may, by order, revoke or suspend
the company's certificate of authority after giving
20 days written notice to the company, or commence
proceedings for the suspension of business in this
State under the procedures set forth by Section
401.1 of this Code. The gross taxable premium
written shall be the gross amount of premiums
received on direct business during the calendar year
on contracts covering risks in this State, except
premiums on annuities, premiums on which State
premium taxes are prohibited by federal law,
premiums paid by the State for health care coverage
for Medicaid eligible insureds as described in
Section 5-2 of the Illinois Public Aid Code,
premiums paid for health care services included as
an element of tuition charges at any university or
college owned and operated by the State of Illinois,
premiums on group insurance contracts under the
State Employees Group Insurance Act of 1971, and
except premiums for deferred compensation plans for
employees of the State, units of local government,
or school districts. The net taxable premium shall
be the gross taxable premium written reduced only by
the following:
(a) the
amount of premiums returned thereon which shall be
limited to premiums returned during the same
preceding calendar year and shall not include the
return of cash surrender values or death benefits on
life policies including annuities;
(b)
dividends on such direct business that have been
paid in cash, applied in reduction of premiums or
left to accumulate to the credit of policyholders or
annuitants. In the case of life insurance, no
deduction shall be made for the payment of deferred
dividends paid in cash to policyholders on maturing
policies; dividends left to accumulate to the credit
of policyholders or annuitants shall be included as
gross taxable premium written when such dividend
accumulations are applied to purchase paid-up
insurance or to shorten the endowment or premium
paying period.
(2) The
annual privilege tax payment due from a company
under subsection (4) of this Section may be reduced
by: (a) the excess amount, if any, by which the
aggregate income taxes paid by the company, on a
cash basis, for the preceding calendar year under
subsections (a) through (d) of Section 201 of the
Illinois Income Tax Act exceed 1.5% of the company's
net taxable premium written for that prior calendar
year, as determined under subsection (1) of this
Section; and (b) the amount of any fire department
taxes paid by the company during the preceding
calendar year under Section 11-10-1 of the Illinois
Municipal Code. Any deductible amount or offset
allowed under items (a) and (b) of this subsection
for any calendar year will not be allowed as a
deduction or offset against the company's privilege
tax liability for any other taxing period or
calendar year.
(3) If a
company survives or was formed by a merger,
consolidation, reorganization, or reincorporation,
the premiums received and amounts returned or paid
by all companies party to the merger, consolidation,
reorganization, or reincorporation shall, for
purposes of determining the amount of the tax
imposed by this Section, be regarded as received,
returned, or paid by the surviving or new company.
(4) (a)
All companies subject to the provisions of this
Section shall make an annual return for the
preceding calendar year on or before March 15
setting forth such information on such forms as the
Director may reasonably require. Payments of
quarterly installments of the taxpayer's total
estimated tax for the current calendar year shall be
due on or before April 15, June 15, September 15,
and December 15 of such year, except that all
companies transacting insurance in this State whose
annual tax for the immediately preceding calendar
year was less than $5,000 shall make only an annual
return. Failure of a company to make the annual
payment, or to make the quarterly payments, if
required, of at least 25% of either (i) the total
tax paid during the previous calendar year or (ii)
80% of the actual tax for the current calendar year
shall subject it to the penalty provisions set forth
in Section 412 of this Code.
(b)
Notwithstanding the foregoing provisions, no annual
return shall be required or made on March 15, 1998,
under this subsection. For the calendar year 1998:
(i) each
health maintenance organization shall have no
estimated tax installments;
(ii) all
companies subject to the tax as of July 1, 1998 as
set forth in subsection (1) shall have estimated tax
installments due on September 15 and December 15 of
1998 which installments shall each amount to no less
than one-half of 80% of the actual tax on its net
taxable premium written during the period July 1,
1998, through December 31, 1998; and
(iii) all
other companies shall have estimated tax
installments due on June 15, September 15, and
December 15 of 1998 which installments shall each
amount to no less than one-third of 80% of the
actual tax on its net taxable premium written during
the calendar year 1998.
In the year
1999 and thereafter all companies shall make annual
and quarterly installments of their estimated tax as
provided by paragraph (a) of this subsection.
(5) In
addition to the authority specifically granted under
Article XXV of this Code, the Director shall have
such authority to adopt rules and establish forms as
may be reasonably necessary for purposes of
determining the allocation of Illinois corporate
income taxes paid under subsections (a) through (d)
of Section 201 of the Illinois Income Tax Act
amongst members of a business group that files an
Illinois corporate income tax return on a unitary
basis, for purposes of regulating the amendment of
tax returns, for purposes of defining terms, and for
purposes of enforcing the provisions of Article XXV
of this Code. The Director shall also have authority
to defer, waive, or abate the tax imposed by this
Section if in his opinion the company's solvency and
ability to meet its insured obligations would be
immediately threatened by payment of the tax due.
(215 ILCS
5/410)
Sec. 410.
Reports and statements for purpose of auditing
retaliatory and privilege tax returns.
(1) For the
purpose of enabling the Director to audit the
retaliatory and privilege tax calculation of a
company liable for such tax under the provisions of
Sections 409, 444 and 444.1, every such company, in
addition to all other statements and reports
required by law, shall file a report in writing with
the Director not later than March 1 of each year, in
the form prescribed by the Director, signed and
sworn to by its president, vice president,
secretary, treasurer or manager.
(2) In every
such return the reporting of premiums for tax
purposes shall be on a written basis or on a paid
for basis, consistent with the basis required by the
annual statement of the insurer filed with the
Director pursuant to Section 136.
(3) The
Director may require at any time verified
supplemental statements with reference to any matter
pertinent to the proper calculation of the tax.
(215 ILCS
5/412)
Sec. 412.
Refunds; penalties; collection.
(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 or any other state, any authorized
company has paid to him, pursuant to 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 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, 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 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
created in the State treasury.
(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 the preceding calendar year as a result
of overpayment of tax liability under Sections 409,
444, and 444.1 of this Code and the denominator of
which shall be the amounts collected pursuant to
Sections 409, 444, and 444.1 of this Code during the
preceding calendar year. However, if there were no
cash refunds paid in a preceding calendar year, the
Department shall deposit 5% of the amount collected
in that preceding calendar year pursuant to Sections
409, 444, and 444.1 of this Code into the Insurance
Premium Tax Refund Fund instead of an amount
calculated by using the annual percentage.
(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 409, 444, and 444.1 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 Premium Tax Refund Fund only to the extent
that amounts have been deposited and retained in the
Insurance Premium Tax Refund Fund.
(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.
(2) When any
insurance company or any surplus line producer fails
to file any tax return required under Sections
408.1, 409, 444, 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 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.
(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, 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.
(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 due. Such amount shall be in lieu of any
determined under paragraph (a).
(4) Any
insurance company or any surplus line producer which
fails to pay the full amount due under this Section
or Sections 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 penalties,
for interest on such deficiency at the rate of 12%
per annum, or at such higher adjusted rates as are
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.
(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.
(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.
(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.
(215 ILCS
5/413)
Sec. 413.
Privilege Tax Payable on Admission of Foreign or
Alien Company.
(1) Every
foreign or alien company applying for a certificate
of authority to transact business in this State
shall pay to the Director a tax for the privilege of
transacting business in this State in accordance
with Section 409.
(2) If
during all or any part of the 3 year period next
preceding the date of application for a certificate
of authority the company had a certificate of
authority to transact business in this State, or if
it survives or was formed by a merger,
consolidation, reorganization or reincorporation,
and one or more of the parties thereto was a foreign
or alien company authorized to transact business in
this State during all or any part of such 3 year
period, then the tax shall be determined in
accordance with Section 409 on the basis of the last
entire calendar year during which the company or any
one of the foreign or alien companies parties to the
merger, consolidation, reorganization or
reincorporation was authorized to transact business
in this State, or if none was authorized during any
entire calendar year, then on the basis of the last
partial calendar year during which any of such
companies were authorized to transact business in
this State.
(215 ILCS
5/414a)
Sec. 414a.
Notwithstanding the provisions of this or any other
Act, the tax authorized by Section 414 of this Act
shall not be imposed after January 1, 1979; provided
that this Section shall not prohibit the collection
after January 1, 1979 of any taxes levied under
Section 414 prior to January 1, 1979, on property
subject to assessment and taxation under Section 414
of this Act prior to January 1, 1979. For the
purpose of replacing the revenue lost by taxing
districts, as defined in Section 1-150 of the
Property Tax Code, as a result of the abolition of
ad valorem taxes on personal property after January
1, 1979, there shall be imposed the taxes described
in Section 201(c) and (d) of the Illinois Income Tax
Act, Section 2a.1 of the Messages Tax Act, Section
2a.1 of the Gas Revenue Tax Act, Section 2a.1 of the
Public Utilities Revenue Act, and Section 1 of the
Water Company Invested Capital Tax Act. Such
replacement taxes owed within one year of the
effective date of the taxes established by this
amendatory Act of 1979 shall replace the personal
property tax levies of 1979. The replacement taxes
owed in each succeeding year shall replace the
personal property tax that could have been levied in
each succeeding year.
(215 ILCS
5/415)
Sec. 415. No
taxes to be imposed by political subdivisions. The
fees, charges and taxes provided for by this Article
shall be in lieu of all license fees or privilege or
occupation taxes or other fees levied or assessed by
any municipality, county or other political
subdivision of this State, and no municipality,
county or other political subdivision of this State
shall impose any license fee or privilege or
occupation tax or fee upon any domestic, foreign or
alien company, or upon any of its agents, for the
privilege of doing an insurance business therein,
except the tax authorized by Division 10 of Article
11 of the Illinois Municipal Code, as heretofore and
hereafter amended. This Section shall not be
construed to prohibit the levy and collection of:
(a) State,
county or municipal taxes upon the real and personal
property of such a company, including the tax
imposed by Section 414 of this Code, and
(b) taxes
for the purpose of maintaining the Office of the
State Fire Marshal and paying the expenses incident
thereto.
(215 ILCS
5/416)
(Text of
Section from P.A. 93-721)
Sec. 416.
Illinois Workers' Compensation Commission Operations
Fund Surcharge.
(a) As of
the effective date of this amendatory Act of the
93rd General Assembly, every company licensed or
authorized by the Illinois Department of Insurance
and insuring employers' liabilities arising under
the Workers' Compensation Act or the Workers'
Occupational Diseases Act shall remit to the
Director a surcharge based upon the annual direct
written premium, as reported under Section 136 of
this Act, of the company in the manner provided in
this Section. Such proceeds shall be deposited into
the Illinois Workers' Compensation Commission
Operations Fund as established in the Workers'
Compensation Act. If a company survives or was
formed by a merger, consolidation, reorganization,
or reincorporation, the direct written premiums of
all companies party to the merger, consolidation,
reorganization, or reincorporation shall, for
purposes of determining the amount of the fee
imposed by this Section, be regarded as those of the
surviving or new company.
(b) (1)
Except as provided in subsection (b)(2) of this
Section, beginning on July 1, 2004 and each year
thereafter, the Director shall charge an annual
Illinois Workers' Compensation Commission Operations
Fund Surcharge from every company subject to
subsection (a) of this Section equal to 1.5% of its
direct written premium for insuring employers'
liabilities arising under the Workers' Compensation
Act or Workers' Occupational Diseases Act as
reported in each company's annual statement filed
for the previous year as required by Section 136.
The Illinois Workers' Compensation Commission
Operations Fund Surcharge shall be collected by
companies subject to subsection (a) of this Section
as a separately stated surcharge on insured
employers at the rate of 1.5% of direct written
premium. All sums collected by the Department of
Insurance under the provisions of this Section shall
be paid promptly after the receipt of the same,
accompanied by a detailed statement thereof, into
the Illinois Workers' Compensation Commission
Operations Fund in the State treasury.
(b) (2)
Prior to July 1, 2004, the Director shall charge and
collect the surcharge set forth in subparagraph
(b)(1) of this Section on or before September 1,
2003, December 1, 2003, March 1, 2004 and June 1,
2004. For purposes of this subsection (b)(2), the
company shall remit the amounts to the Director
based on estimated direct premium for each quarter
beginning on July 1, 2003, together with a sworn
statement attesting to the reasonableness of the
estimate, and the estimated amount of direct premium
written forming the bases of the remittance.
(c) In
addition to the authority specifically granted under
Article XXV of this Code, the Director shall have
such authority to adopt rules or establish forms as
may be reasonably necessary for purposes of
enforcing this Section. The Director shall also have
authority to defer, waive, or abate the surcharge or
any penalties imposed by this Section if in the
Director's opinion the company's solvency and
ability to meet its insured obligations would be
immediately threatened by payment of the surcharge
due.
(d) When a
company fails to pay the full amount of any annual
Illinois Workers' Compensation Commission Operations
Fund Surcharge of $100 or more due under this
Section, there shall be added to the amount due as a
penalty the greater of $1,000 or an amount equal to
5% of the deficiency for each month or part of a
month that the deficiency remains unpaid.
(e) The
Department of Insurance may enforce the collection
of any delinquent payment, penalty, or portion
thereof by legal action or in any other manner by
which the collection of debts due the State of
Illinois may be enforced under the laws of this
State.
(f) Whenever
it appears to the satisfaction of the Director that
a company has paid pursuant to this Act an Illinois
Workers' Compensation Commission Operations Fund
Surcharge in an amount in excess of the amount
legally collectable from the company, the Director
shall issue a credit memorandum for an amount equal
to the amount of such overpayment. A credit
memorandum may be applied for the 2-year period from
the date of issuance, against the payment of any
amount due during that period under the surcharge
imposed by this Section or, subject to reasonable
rule of the Department of Insurance including
requirement of notification, may be assigned to any
other company subject to regulation under this Act.
Any application of credit memoranda after the period
provided for in this Section is void.
(g)
Annually, the Governor may direct a transfer of up
to 2% of all moneys collected under this Section to
the Insurance Financial Regulation Fund.
(Text of
Section from P.A. 93-840)
Sec. 416.
Industrial Commission Operations Fund Surcharge.
(a) As of
the effective date of this amendatory Act of 2004,
every company licensed or authorized by the Illinois
Department of Insurance and insuring employers'
liabilities arising under the Workers' Compensation
Act or the Workers' Occupational Diseases Act shall
remit to the Director a surcharge based upon the
annual direct written premium, as reported under
Section 136 of this Act, of the company in the
manner provided in this Section. Such proceeds shall
be deposited into the Industrial Commission
Operations Fund as established in the Workers'
Compensation Act. If a company survives or was
formed by a merger, consolidation, reorganization,
or reincorporation, the direct written premiums of
all companies party to the merger, consolidation,
reorganization, or reincorporation shall, for
purposes of determining the amount of the fee
imposed by this Section, be regarded as those of the
surviving or new company.
(b) (1)
Except as provided in subsection (b)(2) of this
Section, beginning on the effective date of this
amendatory Act of 2004 and on July 1 of each year
thereafter, the Director shall charge an annual
Industrial Commission Operations Fund Surcharge from
every company subject to subsection (a) of this
Section equal to 1.01% of its direct written premium
for insuring employers' liabilities arising under
the Workers' Compensation Act or Workers'
Occupational Diseases Act as reported in each
company's annual statement filed for the previous
year as required by Section 136. The Industrial
Commission Operations Fund Surcharge shall be
collected by companies subject to subsection (a) of
this Section as a separately stated surcharge on
insured employers at the rate of 1.01% of direct
written premium. The Industrial Commission | 
