Illinois 2023-2024 Regular Session

Illinois Senate Bill SB1961 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1961 Introduced 2/9/2023, by Sen. Bill Cunningham SYNOPSIS AS INTRODUCED: New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4 Creates the Insurance Business Transfer Act. Provides that notwithstanding any other provision of law, a court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this Act. Sets forth provisions concerning notice requirements, application procedure, application to a court for approval of a plan, approval and denial of insurance business transfer plans, and fees and costs. Provides that the Department of Insurance may adopt rules that are consistent with the provisions. Provides that the portion of the application for an insurance business transfer that would otherwise be confidential, including any documents, materials, communications, or other information submitted to the Director of Insurance in contemplation of an application, shall not lose such confidentiality. Provides that insurers consent to the jurisdiction of the Director with regard to ongoing oversight of operations, management, and solvency relating to the transferred business. Provides that at the time of filing its application for review and approval of an insurance business transfer plan, an applicant shall pay a nonrefundable fee of $10,000 to the Department. Provides that the Director may direct the applicant to retain parties to assist Department personnel. Defines terms. Amends the Illinois Insurance Code. Changes the definition of "insolvent company" to include any company which has assumed or has been allocated a policy obligation through an approved insurance business transfer plan. LRB103 28001 BMS 54380 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1961 Introduced 2/9/2023, by Sen. Bill Cunningham SYNOPSIS AS INTRODUCED: New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4 New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4 Creates the Insurance Business Transfer Act. Provides that notwithstanding any other provision of law, a court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this Act. Sets forth provisions concerning notice requirements, application procedure, application to a court for approval of a plan, approval and denial of insurance business transfer plans, and fees and costs. Provides that the Department of Insurance may adopt rules that are consistent with the provisions. Provides that the portion of the application for an insurance business transfer that would otherwise be confidential, including any documents, materials, communications, or other information submitted to the Director of Insurance in contemplation of an application, shall not lose such confidentiality. Provides that insurers consent to the jurisdiction of the Director with regard to ongoing oversight of operations, management, and solvency relating to the transferred business. Provides that at the time of filing its application for review and approval of an insurance business transfer plan, an applicant shall pay a nonrefundable fee of $10,000 to the Department. Provides that the Director may direct the applicant to retain parties to assist Department personnel. Defines terms. Amends the Illinois Insurance Code. Changes the definition of "insolvent company" to include any company which has assumed or has been allocated a policy obligation through an approved insurance business transfer plan. LRB103 28001 BMS 54380 b LRB103 28001 BMS 54380 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1961 Introduced 2/9/2023, by Sen. Bill Cunningham SYNOPSIS AS INTRODUCED:
3	3	New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4 New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4
4	4	New Act
5	5	215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4
6	6	Creates the Insurance Business Transfer Act. Provides that notwithstanding any other provision of law, a court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this Act. Sets forth provisions concerning notice requirements, application procedure, application to a court for approval of a plan, approval and denial of insurance business transfer plans, and fees and costs. Provides that the Department of Insurance may adopt rules that are consistent with the provisions. Provides that the portion of the application for an insurance business transfer that would otherwise be confidential, including any documents, materials, communications, or other information submitted to the Director of Insurance in contemplation of an application, shall not lose such confidentiality. Provides that insurers consent to the jurisdiction of the Director with regard to ongoing oversight of operations, management, and solvency relating to the transferred business. Provides that at the time of filing its application for review and approval of an insurance business transfer plan, an applicant shall pay a nonrefundable fee of $10,000 to the Department. Provides that the Director may direct the applicant to retain parties to assist Department personnel. Defines terms. Amends the Illinois Insurance Code. Changes the definition of "insolvent company" to include any company which has assumed or has been allocated a policy obligation through an approved insurance business transfer plan.
7	7	LRB103 28001 BMS 54380 b LRB103 28001 BMS 54380 b
8	8	LRB103 28001 BMS 54380 b
9	9	A BILL FOR
10	10	SB1961LRB103 28001 BMS 54380 b SB1961 LRB103 28001 BMS 54380 b
11	11	SB1961 LRB103 28001 BMS 54380 b
12	12	1 AN ACT concerning regulation.
13	13	2 Be it enacted by the People of the State of Illinois,
14	14	3 represented in the General Assembly:
15	15	4 Section 1. Short title. This Act may be cited as the
16	16	5 Insurance Business Transfer Act.
17	17	6 Section 3. Purpose and intent. The purpose of this Act is
18	18	7 to provide options to address the significant limitations in
19	19	8 the current methods available to insurers to transfer or
20	20	9 assume blocks of insurance business in an efficient and
21	21	10 cost-effective manner that provides needed legal finality for
22	22	11 such transfers in order to provide for improved operational
23	23	12 and capital efficiency for insurance companies, stimulates the
24	24	13 economy by attracting segments of the insurance industry to
25	25	14 this State, makes this State an attractive home jurisdiction
26	26	15 for insurance companies, encourages economic growth and
27	27	16 increased investment in the financial services sector, and
28	28	17 increases the availability of quality insurance industry jobs
29	29	18 in this State. These purposes are accomplished by providing a
30	30	19 basis and procedures for the transfer and statutory novation
31	31	20 of policies from a transferring insurer to an assuming insurer
32	32	21 by way of an insurance business transfer without the
33	33	22 affirmative consent of policyholders or reinsureds. This Act
34	34	23 establishes the requirements for notice and disclosure and
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38	38	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1961 Introduced 2/9/2023, by Sen. Bill Cunningham SYNOPSIS AS INTRODUCED:
39	39	New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4 New Act 215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4
40	40	New Act
41	41	215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4
42	42	Creates the Insurance Business Transfer Act. Provides that notwithstanding any other provision of law, a court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this Act. Sets forth provisions concerning notice requirements, application procedure, application to a court for approval of a plan, approval and denial of insurance business transfer plans, and fees and costs. Provides that the Department of Insurance may adopt rules that are consistent with the provisions. Provides that the portion of the application for an insurance business transfer that would otherwise be confidential, including any documents, materials, communications, or other information submitted to the Director of Insurance in contemplation of an application, shall not lose such confidentiality. Provides that insurers consent to the jurisdiction of the Director with regard to ongoing oversight of operations, management, and solvency relating to the transferred business. Provides that at the time of filing its application for review and approval of an insurance business transfer plan, an applicant shall pay a nonrefundable fee of $10,000 to the Department. Provides that the Director may direct the applicant to retain parties to assist Department personnel. Defines terms. Amends the Illinois Insurance Code. Changes the definition of "insolvent company" to include any company which has assumed or has been allocated a policy obligation through an approved insurance business transfer plan.
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44	44	LRB103 28001 BMS 54380 b
45	45	A BILL FOR
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51	51	New Act
52	52	215 ILCS 5/534.4 from Ch. 73, par. 1065.84-4
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71	71	1 standards and procedures for the approval of the transfer and
72	72	2 novation by the Director and a court pursuant to an insurance
73	73	3 business transfer plan. This Act does not limit or restrict
74	74	4 other means of effecting a transfer or novation.
75	75	5 Section 5. Definitions. As used in this Act:
76	76	6 "Affiliate" means a person that directly or indirectly,
77	77	7 through one or more intermediaries, controls, is controlled
78	78	8 by, or is under common control with the person specified.
79	79	9 "Applicant" means a transferring insurer or reinsurer
80	80	10 applying under this Act.
81	81	11 "Assuming insurer" means an insurer authorized to transact
82	82	12 business in Class 2 or Class 3 of Section 4 of the Illinois
83	83	13 Insurance Code that is domiciled in this State that assumes or
84	84	14 seeks to assume policies from a transferring insurer pursuant
85	85	15 to this Act.
86	86	16 "Department" means the Department of Insurance.
87	87	17 "Director" means the Director of Insurance.
88	88	18 "Implementation order" means an order issued by a court
89	89	19 under this Act.
90	90	20 "Independent expert" means an impartial person who has no
91	91	21 financial interest in either the assuming insurer or
92	92	22 transferring insurer, has not been employed by or acted as an
93	93	23 officer, director, consultant, or other independent contractor
94	94	24 for either the assuming insurer or transferring insurer within
95	95	25 the past 12 months, is not appointed by the Director to assist
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106	106	1 in any capacity in any insurer rehabilitation or delinquency
107	107	2 proceeding, is receiving no compensation in connection with
108	108	3 the transaction governed by this Act other than a fee based on
109	109	4 a fixed or hourly basis that is not contingent on the approval
110	110	5 or consummation of an insurance business transfer, and
111	111	6 provides proof of insurance coverage that is satisfactory to
112	112	7 the Director.
113	113	8 "Insurance business transfer" means a transfer and
114	114	9 novation that, once approved pursuant to this Act, transfers
115	115	10 insurance obligations or risks, or both, of existing or
116	116	11 in-force contracts of insurance or reinsurance from a
117	117	12 transferring insurer to an assuming insurer, and effects a
118	118	13 novation of the transferred contracts of insurance or
119	119	14 reinsurance with the result that the assuming insurer becomes
120	120	15 directly liable to the policyholders of the transferring
121	121	16 insurer and the transferring insurer's insurance obligations
122	122	17 or risks, or both, under the contracts are extinguished.
123	123	18 "Insurance business transfer plan" means the plan
124	124	19 submitted to the Department to accomplish the transfer and
125	125	20 novation pursuant to an insurance business transfer, including
126	126	21 any associated transfer of assets and rights from or on behalf
127	127	22 of the transferring insurer to the assuming insurer.
128	128	23 "Insurer" means an insurance, surety, or reinsurance
129	129	24 company, corporation, partnership, association, society,
130	130	25 order, individual, or aggregation of individuals engaging in
131	131	26 or proposing or attempting to engage in nonlife and accident
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142	142	1 and health insurance or surety business, including the
143	143	2 exchanging of reciprocal or inter-insurance contracts between
144	144	3 individuals, partnerships, and corporations.
145	145	4 "Policy" means a policy, certificate of insurance, or a
146	146	5 contract of reinsurance pursuant to which an insurer agrees to
147	147	6 assume an obligation or risk, or both, of the policyholder or
148	148	7 to make payments on behalf of, or to, the policyholder or its
149	149	8 beneficiaries, including property and casualty insurance.
150	150	9 "Policy" does not include any policy, contract, or certificate
151	151	10 of insurance as defined in clause (a) or (b) of Class 1 of
152	152	11 Section 4 of the Illinois Insurance Code.
153	153	12 "Policyholder" means an insured or a reinsured under a
154	154	13 policy that is part of the subject business.
155	155	14 "Subject business" means the policy or policies that are
156	156	15 the subject of the insurance business transfer plan.
157	157	16 "Transfer and novation" means the transfer of insurance
158	158	17 obligations or risks, or both, of existing or in-force
159	159	18 policies from a transferring insurer to an assuming insurer
160	160	19 that is intended to effect a novation of the transferred
161	161	20 policies with the result that the assuming insurer becomes
162	162	21 directly liable to the policyholders of the transferring
163	163	22 insurer on the transferred policies and the transferring
164	164	23 insurer's obligations or risks, or both, under the transferred
165	165	24 policies are extinguished.
166	166	25 "Transferring insurer" means an insurer or reinsurer that
167	167	26 transfers and novates or seeks to transfer and novate
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178	178	1 obligations or risks, or both, under one or more policies to an
179	179	2 assuming insurer pursuant to an insurance business transfer
180	180	3 plan.
181	181	4 Section 10. Court authority. Notwithstanding any other
182	182	5 provision of law, a court may issue any order, process, or
183	183	6 judgment that is necessary or appropriate to carry out the
184	184	7 provisions of this Act. No provision of this Act shall be
185	185	8 construed to preclude a court from, on its own motion, taking
186	186	9 any action or making any determination necessary or
187	187	10 appropriate to enforce or implement court orders or rules or
188	188	11 to prevent an abuse of power.
189	189	12 Section 15. Notice requirements.
190	190	13 (a) Whenever notice is required to be given by an
191	191	14 applicant under this Act, except as otherwise permitted by a
192	192	15 court or the Director, the applicant shall within 15 days
193	193	16 after the event triggering the requirement transmit the
194	194	17 notice:
195	195	18 (1) to the chief insurance regulator in each
196	196	19 jurisdiction:
197	197	20 (A) in which the applicant holds or has ever held a
198	198	21 certificate of authority; and
199	199	22 (B) in which policies that are part of the subject
200	200	23 business were issued or policyholders currently
201	201	24 reside;
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212	212	1 (2) to the National Conference of Insurance Guaranty
213	213	2 Funds and all state insurance guaranty associations for
214	214	3 the states:
215	215	4 (A) in which the applicant holds or has ever held a
216	216	5 certificate of authority; and
217	217	6 (B) in which policies that are part of the subject
218	218	7 business were issued or policyholders currently
219	219	8 reside;
220	220	9 (3) to reinsurers of the applicant pursuant to the
221	221	10 notice provisions of the reinsurance agreements applicable
222	222	11 to the policies that are part of the subject business or,
223	223	12 where an agreement has no provision for notice, by
224	224	13 internationally recognized delivery service;
225	225	14 (4) to all policyholders holding policies that are
226	226	15 part of the subject business at their last known address
227	227	16 as indicated by the records of the applicant or to the
228	228	17 address to which premium notices or other policy documents
229	229	18 are sent. A notice of transfer shall also be sent to the
230	230	19 transferring insurer's agents or brokers of record on the
231	231	20 subject business; and
232	232	21 (5) by publication in a newspaper of general
233	233	22 circulation in the state in which the applicant has its
234	234	23 principal place of business and in such other publications
235	235	24 that the Director requires.
236	236	25 (b) If notice is given in accordance with this Section,
237	237	26 any orders under this Act shall be conclusive with respect to
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248	248	1 all intended recipients of the notice whether or not they
249	249	2 receive actual notice.
250	250	3 (c) If this Act requires that the applicant provide notice
251	251	4 but the Director has been named receiver of the applicant, the
252	252	5 Director shall provide the required notice.
253	253	6 (d) Notice under this Section may take the form of
254	254	7 first-class mail, facsimile, or electronic notice.
255	255	8 Section 20. Application procedure.
256	256	9 (a) An insurance business transfer plan shall be filed by
257	257	10 the applicant with the Director for his or her review and
258	258	11 approval no sooner than January 1, 2024. The plan may be
259	259	12 supplemented by other information deemed necessary by the
260	260	13 Director, and shall contain the following information or an
261	261	14 explanation as to why the following information is not
262	262	15 included:
263	263	16 (1) the name, address, and telephone number of the
264	264	17 transferring insurer and the assuming insurer and their
265	265	18 respective direct and indirect controlling persons, if
266	266	19 any;
267	267	20 (2) a summary of the insurance business transfer plan;
268	268	21 (3) an identification and description of the subject
269	269	22 business;
270	270	23 (4) the most recent audited financial statements and
271	271	24 statutory annual and quarterly reports of the transferring
272	272	25 insurer and the assuming insurer filed with their
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283	283	1 domiciliary regulator;
284	284	2 (5) the most recent actuarial report and opinion that
285	285	3 quantify the liabilities associated with the subject
286	286	4 business;
287	287	5 (6) pro forma financial statements showing the
288	288	6 projected statutory balance sheet, results of operation,
289	289	7 and cash flows of the assuming insurer for the 3 years
290	290	8 following the proposed transfer and novation;
291	291	9 (7) officers' certificates of the transferring insurer
292	292	10 and the assuming insurer attesting that each has obtained
293	293	11 all required internal approvals and authorizations
294	294	12 regarding the insurance business transfer plan and
295	295	13 completed all necessary and appropriate actions relating
296	296	14 thereto;
297	297	15 (8) a proposal for plan implementation and
298	298	16 administration, including the form of notice to be
299	299	17 provided under the insurance business transfer plan to any
300	300	18 policyholder whose policy is part of the subject business;
301	301	19 (9) a full description as to how notice under the
302	302	20 insurance business transfer plan shall be provided;
303	303	21 (10) a description of any reinsurance arrangements
304	304	22 that would pass to the assuming insurer under the
305	305	23 insurance business transfer plan;
306	306	24 (11) a description of any guarantees or additional
307	307	25 reinsurance that will cover the subject business following
308	308	26 the transfer and novation;
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319	319	1 (12) a statement describing the assuming insurer's
320	320	2 proposed investment policies and any contemplated
321	321	3 third-party claims management and administration
322	322	4 arrangements;
323	323	5 (13) a description of how the transferring and
324	324	6 assuming insurers will be licensed for the following
325	325	7 guaranty association coverage purposes:
326	326	8 (A) guaranty association coverage;
327	327	9 (B) the financial implications of the transaction
328	328	10 including solvency, capital adequacy, cash flow,
329	329	11 reserves, asset quality, and risk-based capital;
330	330	12 (C) an analysis of the assuming insurer's
331	331	13 corporate governance structure to ensure that there is
332	332	14 proper board management oversight and expertise to
333	333	15 manage the subject business;
334	334	16 (D) the competency, experience, and integrity of
335	335	17 the persons who would control the operation of an
336	336	18 involved insurer; and
337	337	19 (E) ensuring the transaction is not being made for
338	338	20 improper purposes, including fraud;
339	339	21 (14) evidence of approval or nonobjection of the
340	340	22 transfer from the chief insurance regulator of the state
341	341	23 of the transferring insurer's domicile; and
342	342	24 (15) a report from an independent expert, selected by
343	343	25 the Director from a list of at least 2 nominees submitted
344	344	26 jointly by the transferring insurer and the assuming
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355	355	1 insurer, to assist the Director and a court in connection
356	356	2 with their review of the proposed transaction. If the
357	357	3 Director, in his or her sole discretion, rejects the
358	358	4 nominees, he or she may appoint the independent expert.
359	359	5 The report shall provide the following:
360	360	6 (A) a statement of the independent expert's
361	361	7 professional qualifications and descriptions of the
362	362	8 experience that qualifies him or her as an expert
363	363	9 suitable for the engagement;
364	364	10 (B) whether the independent expert has, or has
365	365	11 had, direct or indirect interest in the transferring
366	366	12 or assuming insurer or any of their respective
367	367	13 affiliates;
368	368	14 (C) the scope of the report;
369	369	15 (D) a summary of the terms of the insurance
370	370	16 business transfer plan to the extent relevant to the
371	371	17 report;
372	372	18 (E) a listing and summaries of documents, reports,
373	373	19 and other material information the independent expert
374	374	20 has considered in preparing the report and whether any
375	375	21 information requested was not provided;
376	376	22 (F) the extent to which the independent expert has
377	377	23 relied on information provided by and judgment of
378	378	24 others;
379	379	25 (G) the people on whom the independent expert has
380	380	26 relied and why, in his or her opinion, such reliance is
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391	391	1 reasonable;
392	392	2 (H) the independent expert's opinion of the likely
393	393	3 effects of the insurance business transfer plan on
394	394	4 policyholders, reinsurers, and claimants,
395	395	5 distinguishing between:
396	396	6 (i) transferring policyholders, reinsurers,
397	397	7 and claimants;
398	398	8 (ii) policyholders, reinsurers, and claimants
399	399	9 of the transferring insurer whose policies will
400	400	10 not be transferred; and
401	401	11 (iii) policyholders, reinsurers, and claimants
402	402	12 of the assuming insurer;
403	403	13 (I) the facts and circumstances supporting each
404	404	14 opinion that the independent expert expresses in the
405	405	15 report; and
406	406	16 (J) consideration as to whether the security
407	407	17 position of policyholders that are affected by the
408	408	18 insurance business transfer are materially adversely
409	409	19 affected by the transfer.
410	410	20 (b) The independent expert's report as required by
411	411	21 paragraph (15) of subsection (a) shall include, but not be
412	412	22 limited to, a review of the following:
413	413	23 (1) analysis of the transferring insurer's actuarial
414	414	24 review of resources for the subject business to determine
415	415	25 the reserve adequacy;
416	416	26 (2) analysis of the financial condition of the
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427	427	1 transferring and assuming insurers and the effect the
428	428	2 transfer will have on the financial condition of each
429	429	3 company;
430	430	4 (3) review of the plans or proposals the assuming
431	431	5 insurer has with respect to the administration of the
432	432	6 policies subject to the proposed transfer;
433	433	7 (4) whether the proposed transfer has a material,
434	434	8 adverse impact on the policyholders, reinsurers, and
435	435	9 claimants of the transferring and the assuming insurers;
436	436	10 (5) analysis of the assuming insurer's corporate
437	437	11 governance structure to ensure that there is proper board
438	438	12 and management oversight and expertise to manage the
439	439	13 subject business; and
440	440	14 (6) any other information that the Director requests
441	441	15 in order to review the insurance business transfer.
442	442	16 (c) The Director shall authorize the submission of the
443	443	17 insurance business transfer plan to a court unless he or she
444	444	18 finds that the insurance business transfer would have a
445	445	19 material adverse impact on the interests of policyholders,
446	446	20 reinsurers, or claimants that are part of the subject
447	447	21 business.
448	448	22 (d) If the Director determines that the insurance business
449	449	23 transfer would have a material adverse impact on the interests
450	450	24 of policyholders, reinsurers, or claimants that are part of
451	451	25 the subject business, he or she shall notify the applicant and
452	452	26 specify any modifications, supplements, or amendments and any
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463	463	1 additional information or documentation with respect to the
464	464	2 plan that must be provided to the Director before he or she
465	465	3 shall allow the applicant to proceed with the court filing.
466	466	4 (e) The applicant shall have 30 days following the date
467	467	5 the Director notifies him or her of a determination under
468	468	6 subsection (d) to file an amended insurance business transfer
469	469	7 plan providing the modifications, supplements, or amendments
470	470	8 and additional information or documentation as requested by
471	471	9 the Director. If necessary, the applicant may request in
472	472	10 writing an extension of time of 30 days. If the applicant does
473	473	11 not make an amended filing within the time period provided in
474	474	12 this subsection, including any extension of time granted by
475	475	13 the Director, the insurance business transfer plan filing
476	476	14 shall terminate and a subsequent filing by the applicant shall
477	477	15 be considered a new filing which shall require compliance with
478	478	16 all provisions of this Act as if the prior filing had never
479	479	17 been made.
480	480	18 (f) The Director's review period shall recommence when the
481	481	19 modification, supplement, amendment, or additional information
482	482	20 requested in subsection (d) is received.
483	483	21 (g) If the Director determines that the plan may proceed
484	484	22 with the court filing, the Director shall confirm that fact in
485	485	23 writing to the applicant.
486	486	24 Section 25. Application to the court for approval of a
487	487	25 plan.
488	488
489	489
490	490
491	491
492	492
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494	494
495	495
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497	497	SB1961 - 14 - LRB103 28001 BMS 54380 b
498	498	1 (a) Within 30 days after notice from the Director that the
499	499	2 applicant may proceed with the court filing, the applicant
500	500	3 shall apply to the court for approval of the insurance
501	501	4 business transfer plan. Upon written request by the applicant,
502	502	5 the Director may extend the period for filing an application
503	503	6 with the court for an additional 30 days.
504	504	7 (b) The applicant shall inform the court of the reasons
505	505	8 why he or she petitions the court to find no material adverse
506	506	9 impact to policyholders, reinsurers, or claimants affected by
507	507	10 the proposed transfer.
508	508	11 (c) The application shall be in the form of a verified
509	509	12 petition for implementation of the insurance business transfer
510	510	13 plan in the court. The petition shall include the insurance
511	511	14 business transfer plan and shall identify any documents and
512	512	15 witnesses which the applicant intends to present at a hearing
513	513	16 regarding the petition.
514	514	17 (d) The Director shall be a party to the proceedings
515	515	18 before the court concerning the petition and shall be served
516	516	19 with copies of all filings. The Director's position in the
517	517	20 proceeding shall not be limited by his or her initial review of
518	518	21 the plan.
519	519	22 (e) Following the filing of the petition, the applicant
520	520	23 shall file a motion for a scheduling order setting a hearing on
521	521	24 the petition.
522	522	25 (f) Within 15 days after receipt of the scheduling order,
523	523	26 the applicant shall cause notice of the hearing to be provided
524	524
525	525
526	526
527	527
528	528
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530	530
531	531
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533	533	SB1961 - 15 - LRB103 28001 BMS 54380 b
534	534	1 in accordance with the notice provisions of Section 15 of this
535	535	2 Act. Following the date of distribution of the notice, there
536	536	3 shall be a 60-day comment period.
537	537	4 (g) The notice to policyholders shall state or provide:
538	538	5 (1) the date and time of the approval hearing;
539	539	6 (2) the name, address, and telephone number of the
540	540	7 assuming insurer and transferring insurer;
541	541	8 (3) that a policyholder may comment on or object to
542	542	9 the transfer and novation;
543	543	10 (4) the procedures and deadline for submitting
544	544	11 comments or objections on the plan;
545	545	12 (5) a summary of any effect that the transfer and
546	546	13 novation will have on the policyholder's rights;
547	547	14 (6) a statement that the assuming insurer is
548	548	15 authorized to assume the subject business and that court
549	549	16 approval of the plan shall extinguish all rights of
550	550	17 policyholders under policies that are part of the subject
551	551	18 business against the transferring insurer;
552	552	19 (7) that policyholders shall not have the opportunity
553	553	20 to opt out of or otherwise reject the transfer and
554	554	21 novation;
555	555	22 (8) contact information for the Department where the
556	556	23 policyholder may obtain further information; and
557	557	24 (9) information on how an electronic copy of the
558	558	25 insurance business transfer plan may be accessed. If
559	559	26 policyholders are unable to readily access electronic
560	560
561	561
562	562
563	563
564	564
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566	566
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570	570	1 copies, the applicant shall provide hard copies by
571	571	2 first-class mail.
572	572	3 (h) Any person, including by their legal representative,
573	573	4 who considers himself, herself, or itself to be adversely
574	574	5 affected can present evidence or comments to the court at the
575	575	6 approval hearing. However, such comment or evidence shall not
576	576	7 confer standing on any person. Any person participating in the
577	577	8 approval hearing must follow the process established by the
578	578	9 court and shall bear his or her own costs and attorney's fees.
579	579	10 Section 30. Approval; denial; insurance business transfer
580	580	11 plans.
581	581	12 (a) After the comment period pursuant to subsection (f) of
582	582	13 Section 25 has ended the insurance business transfer plan
583	583	14 shall be presented by the applicant for approval by the court.
584	584	15 (b) At any time before the court issues an order approving
585	585	16 the insurance business transfer plan, the applicant may
586	586	17 withdraw the insurance business transfer plan without
587	587	18 prejudice.
588	588	19 (c) If the court finds that the implementation of the
589	589	20 insurance business transfer plan would not materially
590	590	21 adversely affect the interests of policyholders, reinsurers,
591	591	22 or claimants that are part of the subject business, the court
592	592	23 shall enter a judgment and implementation order. The judgment
593	593	24 and implementation order shall:
594	594	25 (1) order implementation of the insurance business
595	595
596	596
597	597
598	598
599	599
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605	605	1 transfer plan;
606	606	2 (2) order a statutory novation with respect to all
607	607	3 policyholders or reinsureds and their respective policies
608	608	4 and reinsurance agreements under the subject business,
609	609	5 including the extinguishment of all rights of
610	610	6 policyholders under policies that are part of the subject
611	611	7 business against the transferring insurer, and providing
612	612	8 that the transferring insurer shall have no further
613	613	9 rights, obligations, or liabilities with respect to such
614	614	10 policies, and that the assuming insurer shall have all
615	615	11 such rights, obligations, and liabilities as if it were
616	616	12 the original insurer of such policies;
617	617	13 (3) release the transferring insurer from all
618	618	14 obligations or liabilities under policies that are part of
619	619	15 the subject business;
620	620	16 (4) authorize and order the transfer of property or
621	621	17 liabilities, including, but not limited to, the ceded
622	622	18 reinsurance of transferred policies and contracts on the
623	623	19 subject business, notwithstanding any non-assignment
624	624	20 provisions in any such reinsurance contracts. The subject
625	625	21 business shall vest in and become liabilities of the
626	626	22 assuming insurer;
627	627	23 (5) order that the applicant provide notice of the
628	628	24 transfer and novation in accordance with the notice
629	629	25 provisions in Section 15; and
630	630	26 (6) make such other provisions with respect to
631	631
632	632
633	633
634	634
635	635
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637	637
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641	641	1 incidental, consequential, and supplementary matters as
642	642	2 are necessary to assure the insurance business transfer
643	643	3 plan is fully and effectively carried out.
644	644	4 (d) If the court finds that the insurance business
645	645	5 transfer plan should not be approved, the court by its order
646	646	6 may:
647	647	7 (1) deny the petition; or
648	648	8 (2) provide the applicant leave to file an amended
649	649	9 insurance business transfer plan and petition.
650	650	10 (e) Nothing in this Section in any way effects the right of
651	651	11 appeal of any party.
652	652	12 Section 35. Rules. The Department may adopt rules that are
653	653	13 consistent with the provisions of this Act.
654	654	14 Section 40. Confidentiality. The portion of the
655	655	15 application for an insurance business transfer that would
656	656	16 otherwise be confidential, including any documents, materials,
657	657	17 communications, or other information submitted to the Director
658	658	18 in contemplation of such application, shall not lose such
659	659	19 confidentiality.
660	660	20 Section 45. Ongoing oversight. Insurers subject to this
661	661	21 Act consent to the jurisdiction of the Director with regard to
662	662	22 ongoing oversight of operations, management, and solvency
663	663	23 relating to the transferred business, including the authority
664	664
665	665
666	666
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673	673	SB1961 - 19 - LRB103 28001 BMS 54380 b
674	674	1 of the Director to conduct financial analysis and
675	675	2 examinations.
676	676	3 Section 50. Fees and costs.
677	677	4 (a) At the time of filing its application with the
678	678	5 Director for review and approval of an insurance business
679	679	6 transfer plan, an applicant shall pay a nonrefundable fee of
680	680	7 $10,000 to the Department.
681	681	8 (b) The Director may retain independent attorneys,
682	682	9 appraisers, actuaries, certified public accountants,
683	683	10 authorized consultants, or other professionals and specialists
684	684	11 to assist Department personnel, or direct the applicant to
685	685	12 retain such parties under the direction of the Department, in
686	686	13 connection with the review required by this Act. The cost of
687	687	14 retaining professionals and specialists shall be borne by the
688	688	15 applicant.
689	689	16 (c) The transferring insurer and the assuming insurer
690	690	17 shall jointly be obligated to pay any compensation, costs, and
691	691	18 expenses of the independent expert and any consultants
692	692	19 retained by the independent expert and approved by the
693	693	20 Department incurred in fulfilling the obligations of the
694	694	21 independent expert under this Act. Nothing in this Act shall
695	695	22 be construed to create any duty for the independent expert to
696	696	23 any party other than the Department or a court.
697	697	24 (d) Failure to pay any of the requisite fees or costs
698	698	25 within 30 days after demand shall be grounds for the Director
699	699
700	700
701	701
702	702
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705	705
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709	709	1 to request that a court dismiss the petition for approval of
710	710	2 the insurance business transfer plan before the filing of an
711	711	3 implementation order by the court or, if after the filing of an
712	712	4 implementation order, the Director may suspend or revoke the
713	713	5 assuming insurer's certificate of authority to transact
714	714	6 insurance business in this State.
715	715	7 Section 90. The Illinois Insurance Code is amended by
716	716	8 changing Section 534.4 as follows:
717	717	9 (215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
718	718	10 Sec. 534.4. "Insolvent company" means a company organized
719	719	11 as a stock company, mutual company, reciprocal or Lloyds (a)
720	720	12 which holds a certificate of authority to transact insurance
721	721	13 in this State either at the time the policy was issued or when
722	722	14 the insured event occurred, or any company which has assumed
723	723	15 or has been allocated such policy obligation through merger,
724	724	16 division, consolidation, or reinsurance, or an approved
725	725	17 insurance business transfer plan, whether or not such assuming
726	726	18 company held a certificate of authority to transact insurance
727	727	19 in this State at the time such policy was issued or when the
728	728	20 insured event occurred; and (b) against which a final Order of
729	729	21 Liquidation with a finding of insolvency to which there is no
730	730	22 further right of appeal has been entered by a court of
731	731	23 competent jurisdiction in the company's State of domicile
732	732	24 after the effective date of this Article.
733	733
734	734
735	735
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742	742	SB1961 - 21 - LRB103 28001 BMS 54380 b
743	743	1 (Source: P.A. 100-1190, eff. 4-5-19.)
744	744
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