(215 ILCS 5/Art. VII heading)
UNAUTHORIZED COMPANIES
(215 ILCS 5/121) (from Ch. 73, par. 733)
Sec. 121.
Transacting business without certificate of authority prohibited.
(1) It shall be unlawful for any company to enter into a contract of
insurance as an insurer or to transact insurance business in this State,
without a certificate of authority from the Director; provided that this
subsection shall not apply to contracts procured by agents under the
authority of section 445, nor to contracts of reinsurance.
(2) The following acts, if performed in this State, shall be included
among those deemed to constitute transacting insurance business in this
State:
(a) maintaining an agency or office where contracts are executed which
are or purport to be contracts of insurance with citizens of this or any
other State;
(b) maintaining files or records of contracts of insurance; or
(c) receiving payment of premiums for contracts of insurance.
(3) Any company that violates any of the provisions of subsections (1)
and (2) of this section shall be guilty of a business offense and shall be
required to pay a penalty of not less than $100 nor more
than $1000 for each offense, to be recovered in the name of
the People of the State of Illinois by the State’s Attorney of the county
in which the violation occurs and the penalty so recovered shall be paid
into the county treasury. Each day in which a violation occurs shall
constitute a separate offense.
(4) The failure of a company to obtain a certificate of authority shall
not impair the validity of any act or contract of such company and shall
not prevent such company from defending any action
in any court of this State, but no company transacting insurance business
in this State without a certificate of authority shall be permitted to
maintain an action in any court of this State to
enforce any right, claim or demand arising out of the transaction of such
business until such company shall have obtained a certificate of authority.
Nor shall an action be maintained in any court of this
State by any successor or assignee of such company on any such right, claim
or demand originally held by such company until a certificate of authority
shall have been obtained by such company or by a company which has acquired
all or substantially all of its assets.
(Source: P.A. 83-345.)
(215 ILCS 5/121-1) (from Ch. 73, par. 733-1)
Sec. 121-1.
Purpose of Article.
The purpose of this Article is to subject certain insurers to the
jurisdiction of the Director of Insurance and the courts of this State in
suits by or on behalf of the State. The General Assembly declares that it
is concerned with the protection of residents of this State against acts by
insurers not authorized to do an insurance business in this State, by the
maintenance of fair and honest insurance markets, by protecting authorized
insurers which are subject to regulation from unfair competition by
unauthorized insurers, and by protecting against the evasion of the
insurance regulatory laws of this State. In furtherance of this State
interest, the General Assembly in this Article provides methods for
substituted service of process upon such insurers in any proceeding, suit
or action in any court and substituted service of any notice, order,
pleading or process upon such insurers in any proceeding by the Director of
Insurance to enforce or effect full compliance with the insurance laws of
this State. In so doing, the State exercises its powers to protect its
residents and to define what constitutes transacting an insurance business
in this State, and also exercises powers and privileges available to this
State under Public Law 79-15, 79th Congress of the United States, Chapter
20, 1st Sess., S. 340, 59 Stat. 33; 15 U.S.C. 1011 through 1015, as
amended, which declares that the business of insurance and every person
engaged therein shall be subject to the laws of the several states.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2) (from Ch. 73, par. 733-2)
Sec. 121-2.
Transacting business without certificate of authority
prohibited – Exempt transactions.
It is unlawful for any insurer to transact insurance business in this
State, (as described in Section 121-3,) without a certificate of authority
from the Director. This Section does not however, apply to any transaction
described in Sections 121-2.01 through 121-2.10.
(Source: P.A. 89-124, eff. 7-7-95.)
(215 ILCS 5/121-2.01) (from Ch. 73, par. 733-2.01)
Sec. 121-2.01.
The lawful transaction of business under Section 445.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.02) (from Ch. 73, par. 733-2.02)
Sec. 121-2.02.
The lawful transaction of reinsurance by insurers.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.03) (from Ch. 73, par. 733-2.03)
Sec. 121-2.03.
Transactions in this State involving a policy lawfully solicited,
written, and delivered outside of this State covering only subjects of
insurance not resident, located, or expressly to be performed in this State
at the time of issuance, and which transactions are subsequent to the
issuance of such policy.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.04) (from Ch. 73, par. 733-2.04)
Sec. 121-2.04.
Attorneys acting in the ordinary relation of attorney and client in the
adjustment of claims or losses.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.05) (from Ch. 73, par. 733-2.05)
Sec. 121-2.05.
Group insurance policies issued and delivered in other
State-Transactions in this State.
With the
exception of insurance transactions authorized under Sections 230.2 or
367.3 of this Code, transactions in this State involving group legal, group
life and
group accident and health or blanket
accident and health insurance or group
annuities where the master policy of such groups was lawfully issued and
delivered in, and under the laws of, a State in which the insurer was
authorized to do an insurance business, to a group properly established
pursuant to law or regulation, and where the
policyholder is domiciled or otherwise has a bona fide situs.
(Source: P.A. 86-753.)
(215 ILCS 5/121-2.06) (from Ch. 73, par. 733-2.06)
Sec. 121-2.06.
Transactions in this State involving any policy of insurance or annuity
contract issued before the effective date of this amendatory Act of 1971.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.07) (from Ch. 73, par. 733-2.07)
Sec. 121-2.07.
Transactions in this State relative to a policy issued or to be issued
outside this State involving insurance on vessels, craft or hulls, cargos,
marine builder’s risk, marine protection and indemnity or other risk,
including strikes and war risks commonly insured under ocean or wet marine
forms of policy.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-2.08) (from Ch. 73, par. 733-2.08)
Sec. 121-2.08. Transactions in this State involving contracts of
insurance independently procured directly from an unauthorized insurer by industrial insureds.
(a) As used in this Section:
“Exempt commercial purchaser” means exempt commercial purchaser as the term is defined in subsection (1) of Section 445 of this Code.
“Home state” means home state as the term is defined in subsection (1) of Section 445 of this Code.
“Industrial insured” means an insured:
- (i) that procures the insurance of any risk or risks of the kinds specified in Classes 2 and 3 of Section 4 of this Code by use of the services of a full-time employee who is a qualified risk manager or the services of a regularly and continuously retained consultant who is a qualified risk manager;
- (ii) that procures the insurance directly from an unauthorized insurer without the services of an intermediary insurance producer; and
- (iii) that is an exempt commercial purchaser whose home state is Illinois.
“Insurance producer” means insurance producer as the term is defined in Section 500-10 of this Code.
“Qualified risk manager” means qualified risk manager as the term is defined in subsection (1) of Section 445 of this Code.
“Safety-Net Hospital” means an Illinois hospital that qualifies as a Safety-Net Hospital under Section 5-5e.1 of the Illinois Public Aid Code.
“Unauthorized insurer” means unauthorized insurer as the term is defined in subsection (1) of Section 445 of this Code.
(b) For contracts of insurance effective January 1, 2015 or later, within 90 days after the effective date of each contract of insurance issued under this Section, the insured shall file a report with the Director by submitting the report to the Surplus Line Association of Illinois in writing or in a computer readable format and provide information as designated by the Surplus Line Association of Illinois. The information in the report shall be substantially similar to that required for surplus line submissions as described in subsection (5) of Section 445 of this Code. Where applicable, the report shall satisfy, with respect to the subject insurance, the reporting requirement of Section 12 of the Fire Investigation Act.
(c) For contracts of insurance effective January 1, 2015 through December 31, 2017, within 30 days after filing the report, the insured shall pay to the Director for the use and benefit of the State a sum equal to the gross premium of the contract of insurance multiplied by the surplus line tax rate, as described in paragraph (3) of subsection (a) of Section 445 of this Code, and shall pay the fire marshal tax that would otherwise be due annually in March for insurance subject to tax under Section 12 of the Fire Investigation Act. For contracts of insurance effective January 1, 2018 or later, within 30 days after filing the report, the insured shall pay to the Director for the use and benefit of the State a sum equal to 0.5% of the gross premium of the contract of insurance, and shall pay the fire marshal tax that would otherwise be due annually in March for insurance subject to tax under Section 12 of the Fire Investigation Act. For contracts of insurance effective January 1, 2015 or later, within 30 days after filing the report, the insured shall pay to the Surplus Line Association of Illinois a countersigning fee that shall be assessed at the same rate charged to members pursuant to subsection (4) of Section 445.1 of this Code.
(d) For contracts of insurance effective January 1, 2015 or later, the insured shall withhold the amount of the taxes and countersignature fee from the amount of premium charged by and otherwise payable to the insurer for the insurance. If the insured fails to withhold the tax and countersignature fee from the premium, then the insured shall be liable for the amounts thereof and shall pay the amounts as prescribed in subsection (c) of this Section.
(e) Contracts of insurance with an industrial insured that qualifies as a Safety-Net Hospital are not subject to subsections (b) through (d) of this Section.
(Source: P.A. 100-535, eff. 9-22-17; 100-1118, eff. 11-27-18.)
(215 ILCS 5/121-2.09) (from Ch. 73, par. 733-2.09)
Sec. 121-2.09.
Transactions in this State involving bankers’ blanket
bonds or directors’ and officers’ liability insurance issued by a captive
insurance company, formed exclusively for the purpose of providing directors’
and officers’ liability and bankers’ blanket bond insurance to a bank or
bank holding company, as such terms are defined in Section 2 of “The Illinois Bank
Holding Company Act of 1957”, as amended, if the aggregate annual premiums
for each bank or bank holding company for insurance on all of its property
and liability risks total at least $25,000, and such insurance is procured
by a full-time employee acting as an insurance manager or buyer or through
the services of a regularly and continuously retained qualified insurance consultant.
(Source: P.A. 84-1431.)
(215 ILCS 5/121-2.10)
Sec. 121-2.10.
Exempt charitable gift annuities.
The insurance laws of
this State, including this Code, do not apply to any charitable gift annuity,
as defined in Section 501(m)(5) of the Internal Revenue Code, issued by an
organization that is described in Section 170(c) of the Internal
Revenue
Code, if either (i) an insurer authorized to transact
business in this State is directly obligated to the annuitant or (ii) the
organization has been in active
operation for not less than 20 years
before the
date the annuity is issued and has an unrestricted fund balance
of not
less than $2,000,000 on the date the annuity is issued. For
purposes of this Section, “Internal Revenue Code” refers to the
Internal Revenue Code of 1986, as amended, and corresponding provisions of
subsequent federal tax laws.
(Source: P.A. 89-124, eff. 7-7-95; 89-485, eff. 6-21-96.)
(215 ILCS 5/121-3) (from Ch. 73, par. 733-3)
Sec. 121-3.
Transaction of insurance business defined.
Any of the following acts in this State, effected by mail or otherwise
by or on behalf of an unauthorized insurer, constitutes the transaction of
an insurance business in this State.
(a) The making of or proposing to make, as an insurer, an insurance
contract.
(b) The making of or proposing to make, as guarantor or surety, any
contract of guaranty or suretyship as a vocation and not merely incidental
to any other legitimate business or activity of the guarantor or surety.
(c) The taking or receiving of any application for insurance.
(d) The receiving or collection of any premium, commission, membership
fees, assessments, dues or other consideration for any insurance or any
part thereof.
(e) The issuance or delivery of contracts of insurance to residents of
this State or to persons authorized to do business in this State.
(f) Directly or indirectly acting as an agent for or otherwise
representing or aiding on behalf of another any person or insurer in the
solicitation, negotiation, procurement or effectuation of insurance or
renewals thereof or in the dissemination of information as to coverage or
rates, or forwarding of applications, or delivery of policies or contracts,
or inspection of risks, a fixing of rates or investigation or adjustment of
claims or losses or in the transaction of matters subsequent to
effectuation of the contract and arising out of that contract, or in any
other manner representing or assisting a person or insurer in the
transaction of insurance with respect to subjects of insurance resident,
located or to be performed in this State. This paragraph does not prohibit
full-time salaried employees of a corporate insured from acting in the
capacity of an insurance manager or buyer in placing insurance in behalf of
that employer.
(g) The transaction of any kind of insurance business specifically
recognized as transacting an insurance business within the meaning of this
Act.
(h) The transacting or proposing to transact any insurance business in
substance equivalent to any of the foregoing in a manner designed to evade
this Act.
The venue of an act committed by mail is at the point where the matter
transmitted by mail is delivered and takes effect. Unless otherwise
indicated, the term “insurer” as used in this Article includes all
corporations, associations, partnerships and individuals, engaged as
principals in the business of insurance and also includes interinsurance
exchanges and mutual benefit societies.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-4) (from Ch. 73, par. 733-4)
Sec. 121-4.
Validity of contracts – court actions.)
The failure of an insurer transacting insurance business in this State
to obtain a certificate of authority does not impair the validity of any
act or contract of that insurer nor does it prevent that insurer from
defending any action in any court of this State.
However, no insurer transacting insurance business in this State without a
certificate of authority may maintain an action in any court of this State
to enforce any right, claim or demand arising out of the transaction of
that business until the insurer has obtained a certificate of authority.
If any such unauthorized insurer fails to pay any claim or loss within
the provisions of such an insurance contract, any person who assisted or in
any manner aided directly or indirectly in the procurement of the insurance
contract shall be liable to the insured for the full amount of the claim or
loss as provided in that insurance contract.
(Source: P.A. 79-1362.)
(215 ILCS 5/121-5) (from Ch. 73, par. 733-5)
Sec. 121-5.
Injunctive proceedings.
Whenever the Director believes, from evidence satisfactory to him that
any insurer is violating or about to violate Section 121-2 of this Act, the
Director may, through the Illinois Attorney General, cause a complaint to
be filed in the Circuit Court of Cook County, or the Circuit Court of
Sangamon County, to enjoin and restrain that insurer from continuing such
violation or engaging therein or doing any act in furtherance thereof. The
court shall have jurisdiction of the proceeding and may make and enter an
order or judgment awarding such preliminary or final injunctive relief as,
in its judgment, is proper.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-6) (from Ch. 73, par. 733-6)
Sec. 121-6.
Acts constituting Secretary of State as agent for process.
Any act of transacting an insurance business, as set forth in Section
121-3; by any unauthorized insurer constitutes an irrevocable appointment
by that insurer, binding upon him, his executor or administrator, or
successor in interest if a corporation, of the Secretary of State, to be
the true and lawful attorney of such insurer upon whom may be served all
lawful process in any action, suit, or proceeding in any court by the
Director or by the State and upon whom may be served any notice, order,
pleading or process in any proceeding before the Director which arises out
of transacting an insurance business in this State by that insurer. Any act
of transacting an insurance business in this State by any unauthorized
insurer signifies its agreement that any lawful process in such a court
action, suit, or proceeding and any such notice, order, pleading, or
process in an administrative proceeding before the Director so served shall
be of the same legal force and validity as personal service of process in
this State upon that insurer.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-7) (from Ch. 73, par. 733-7)
Sec. 121-7.
Service of process – notice.
Service of process in an action described in Section 121-6 shall be made
by delivering to and leaving with the Secretary of State, or some person in
apparent charge of his office, 2 copies thereof and by payment to the
Secretary of State of the fee prescribed by law. Service upon the Secretary
of State as such attorney shall be service upon the principal.
The Secretary of State shall forthwith forward by certified mail one of
the copies of the process or notice, order, pleading, or process in
proceedings before the Director to the defendant in such court proceeding
or to whom the notice, order, pleading, or process in such administrative
proceeding is addressed or directed at its last known principal place of
business and shall keep a record of all process so served on him which
shall show the day and hour of service. Such service is sufficient if:
(a) Notice of such service and a copy of the court process or the
notice, order, pleading, or process in such administrative proceeding are
sent within 10 days thereafter by certified mail by the plaintiff or the
plaintiff’s attorney in the court proceeding, or by the Director of
Insurance in the administrative proceeding, to the defendant in the court
proceeding or to whom the notice, order, pleading, or process in such
administrative proceeding is addressed or directed at the last known
principal place of business of the defendant in the court or administrative
proceeding.
(b) The defendant’s receipt or receipts issued by the post office with
which the letter is registered, showing the name of the sender of the
letter and the name and address of the person or insurer to whom the letter
is addressed, and an affidavit of the plaintiff or the plaintiff’s attorney
in a court proceeding or of the Director in an administrative proceeding,
showing compliance therewith are filed with the clerk of the court in which
such action, suit, or proceeding is pending or with the Director in
administrative proceedings, by the date the defendant in the court or
administrative proceeding is required to appear or respond thereto, or
within such further time as the court or Director, as the case may be, may
allow.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-8) (from Ch. 73, par. 733-8)
Sec. 121-8.
Judgment or default – time limitation.
No plaintiff is entitled to a judgment or to a determination by default
in any court or administrative proceeding in which court process or notice,
order, pleading, or process in proceedings before the Director is served
under Section 121-7 until the expiration of 45 days from the date of filing
of the affidavit of compliance under that Section.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-9) (from Ch. 73, par. 733-9)
Sec. 121-9.
Other proceedings not barred.
Nothing in this Article limits or affects the right to serve any
process, notice, order, or demand upon any person or insurer in any other
manner now or hereafter permitted by law.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-10) (from Ch. 73, par. 733-10)
Sec. 121-10.
Pleadings by unauthorized insurer – bond or certificate of authority.
Before any unauthorized insurer files or causes to be filed any pleading
in any court action, suit or proceeding or any notice, order, pleading, or
process in an administrative proceeding before the Director instituted
against such person or insurer, by services made as provided in Section
121-7, such insurer must either:
(a) Deposit with the clerk of the court in which such action, suit, or
proceeding is pending, or with the Director in administrative proceedings
before him, cash or securities, or file with such clerk or Director a bond
with good and sufficient sureties, to be approved by the clerk or Director
in an amount to be fixed by the court or Director sufficient to secure the
payment of any final judgment which may be rendered in such action or
administrative proceeding; or
(b) Procure a certificate of authority to transact the business of
insurance in this State. In considering the application of an insurer for a
certificate of authority, for the purposes of this paragraph, the Director
need not assert the provisions of Section 444 against such insurer with
respect to its application if he determines that such company would
otherwise comply with the requirements for a certificate of authority.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-11) (from Ch. 73, par. 733-11)
Sec. 121-11.
Postponement of proceedings – Motions by unauthorized insurer.
The Director, in any administrative proceeding in which service is made
under Section 121-7, may order such postponement as may be necessary to
afford the defendant reasonable opportunity to comply with Section 121-10
and to defend such action.
Nothing in this Article prevents an unauthorized insurer from filing a
motion to quash process or to set aside service thereof made
under Section
121-7, on the ground that the unauthorized insurer has not done any of the
acts enumerated in Section 121-3.
(Source: P.A. 83-346.)
(215 ILCS 5/121-12) (from Ch. 73, par. 733-12)
Sec. 121-12.
Enforcement by Attorney General.
The Attorney General, upon request of the Director, may proceed in the
courts of this State or any reciprocal State to enforce an order or
decision in any court proceeding or in any administrative proceeding before
the Director.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-13) (from Ch. 73, par. 733-13)
Sec. 121-13.
Definitions.) As used in this Article:
(a) “Reciprocal state” means any State or territory of the United States
and the laws of which contain procedures substantially similar to those
specified in this Article for the enforcement of judgments or orders issued
by courts located in other States or territories of the
United States, against an insurer incorporated or authorized to do business
in that State or territory.
(b) “Foreign judgment” means any judgment or order relating to fraudulent
claims practices, false and deceptive advertising, unfair methods of
transacting business, or payment of taxes, of a court located in
a “reciprocal state”, including a court of the United States located
therein, against any insurer incorporated or authorized to do business in
this State.
(c) “Qualified party” means a state regulatory agency acting in its
capacity to enforce the insurance laws of this State.
(Source: P.A. 79-1362.)
(215 ILCS 5/121-14) (from Ch. 73, par. 733-14)
Sec. 121-14.
List of reciprocal states.
The Director shall determine which States and territories qualify as
reciprocal States and shall maintain at all times an up-to-date list of
those States.
(Source: P.A. 77-1565.)
(215 ILCS 5/121-15) (from Ch. 73, par. 733-15)
Sec. 121-15.
Filing and status of foreign judgments.)
A copy of any foreign judgment authenticated in accordance with the
statutes of this State may be filed in the office of the clerk of any
circuit court of this State. The clerk, upon verifying with the Director
that the judgment or order qualifies as a “foreign judgment”, shall treat the
foreign judgment in the same manner as a judgment of any circuit court of this
State. A foreign judgment so filed has the same effect, is subject to the
same procedures, defenses and proceedings for reopening, vacating, or
staying and may be enforced or satisfied in like manner as a judgment of any
circuit court of this State.
(Source: P.A. 79-1362.)
(215 ILCS 5/121-16) (from Ch. 73, par. 733-16)
Sec. 121-16.
Notice of filing.)
At the time of the filing of a foreign judgment, the Attorney General
shall make and file with the clerk of the court an affidavit setting forth
the name and last known post office address of the defendant.
Promptly upon the filing of the foreign judgment and the affidavit, the
clerk shall mail notice of the filing of the foreign judgment to the
defendant at the address given and to the Director and shall note that
mailing in the docket. In addition, the Attorney General may mail a notice
of the filing of the foreign judgment to the defendant and to the Director
and may file proof of mailing with the clerk. Lack of mailing notice of
filing by the clerk does not affect the enforcement proceedings if proof of
mailing by the Attorney General has been filed.
No process for enforcement of a foreign judgment filed
under this Article may issue until 30 days after the date the judgment is
filed.
(Source: P.A. 84-546.)
(215 ILCS 5/121-17) (from Ch. 73, par. 733-17)
Sec. 121-17.
Stay.)
If the defendant shows the circuit court that an appeal from the foreign
judgment is pending or will be taken, or that a stay of enforcement has been
granted, the court shall stay enforcement of the foreign judgment until the
appeal is concluded, the time for appeal expires or the stay of
enforcement
expires or is vacated, upon proof that the defendant has furnished the
security for the satisfaction of the judgment required by the State in which
it was entered.
If the defendant shows the circuit court any ground upon which
enforcement of a judgment of any circuit court of this State would be stayed,
the court shall stay enforcement of the foreign judgment for an appropriate
period, upon requiring the same security for satisfaction of the judgment as
is required in this State.
(Source: P.A. 84-546.)
(215 ILCS 5/121-18) (from Ch. 73, par. 733-18)
Sec. 121-18.
Fees.
Any person filing a foreign judgment must pay to the clerk of the court
such fees as may apply in other cases. Fees for docketing, transcription
or other enforcement proceedings shall be as provided for judgment of the
circuit court.
(Source: P.A. 79-1362.)
(215 ILCS 5/121-19) (from Ch. 73, par. 733-19)
Sec. 121-19.
Fine for unauthorized insurance.
Any unauthorized insurer who transacts any unauthorized act of an
insurance business as set forth in this Act is guilty of a business offense
and may be fined not more than $20,000.
(Source: P.A. 93-32, eff. 7-1-03.)
(215 ILCS 5/122) (from Ch. 73, par. 734)
Sec. 122.
Representing unauthorized company prohibited.
(a) It is unlawful for a person as officer,
director,
clerk,
employee, or agent to serve or represent a company in
connection with an
act performed or contract entered into in violation of Section 121. A person who violates
this
Section is guilty of a Class A misdemeanor.
(b) If, after notice and hearing, the Director finds that a person who
holds or seeks a license or privilege under the jurisdiction of the Director
has represented or served an unauthorized insurer as an owner, director,
officer,
employee, agent, or producer in connection with the sale or solicitation of
insurance contracts or the collection of insurance premiums, the
Director may deny, revoke, refuse to renew, or suspend any of the person’s
licenses or privileges.
(Source: P.A. 88-627, eff. 9-9-94.)
(215 ILCS 5/122-1) (from Ch. 73, par. 734-1)
Sec. 122-1.
The authority and jurisdiction of Insurance Department.
Notwithstanding any other provision of law, and except as provided herein,
any person or other entity which provides coverage in this State for medical,
surgical, chiropractic, naprapathic, physical therapy, speech pathology,
audiology, professional mental health, dental, hospital, ophthalmologic, or
optometric expenses, whether such coverage is by direct-payment, reimbursement,
or otherwise, shall be presumed to be subject to the jurisdiction of the
Department unless the person or other entity shows that while providing such
coverage it is subject to the jurisdiction of another agency of this State,
any subdivision of this State, or the federal government, or is a plan of
self-insurance or other employee welfare benefit program of an individual
employer or labor union established or maintained under or pursuant to a
collective bargaining agreement or other arrangement which provides for
health care services solely for its employees or members and their dependents.
(Source: P.A. 90-7, eff. 6-10-97.)
(215 ILCS 5/122-2) (from Ch. 73, par. 734-2)
Sec. 122-2.
How to Show Jurisdiction.
A person or entity may show that
it is subject to the jurisdiction of another agency of this or another state,
any subdivision of this State, or the Federal Government by providing to
the Director the appropriate certificate, license or other document issued
by the other governmental agency which permits or qualifies it to provide
those coverages.
(Source: P.A. 86-753.)
(215 ILCS 5/122-3) (from Ch. 73, par. 734-3)
Sec. 122-3.
Examination.
Any person or entity which is unable to show
that it is subject to the jurisdiction of another agency of this
state, any subdivision of this state, or the Federal Government, or is an
employee welfare benefit program of an individual employer or labor union
as described in Section 122-1, shall submit to an examination by the Director
to determine the organization and solvency of the person or entity, and to
determine whether or not such person or entity is in compliance with the
applicable provisions of this Code.
(Source: P.A. 86-753.)
(215 ILCS 5/122-4) (from Ch. 73, par. 734-4)
Sec. 122-4.
Subject to State Laws.
Any person or entity unable to show
that it is subject to the jurisdiction of another agency of this
state, any subdivision of this state, or the Federal Government, or is an
employee welfare benefit program of an individual employer or labor union
as described in Section 122-1, shall be subject to all appropriate provisions
of this Code regarding the conduct of its business.
(Source: P.A. 86-753.)
(215 ILCS 5/122-5) (from Ch. 73, par. 734-5)
Sec. 122-5.
Disclosure.
(1) Any agent, broker, producer, administrator, or other
person or company which advertises, solicits, negotiates, procures, sells,
renews, continues or administers coverage in this state, described in Section
122-1 and which is provided by any person or entity described in Section
122-3 shall, if that coverage is not fully insured or otherwise fully covered
by a company authorized to do such business in this State advise any purchaser,
prospective purchaser, and covered person of such
lack of insurance or other coverage.
(2) Any administrator which advertises or administers coverage in this
state, described in Section 122-1 and which is provided by any person or
entity described in Section 122-3 shall advise any agent, broker or other
person or company which advertises, solicits, negotiates, sells, procures,
renews or continues such coverage of the elements of the coverage including
the amount of
“stop-loss” insurance in effect.
(Source: P.A. 86-753.)
(215 ILCS 5/123) (from Ch. 73, par. 735)
Sec. 123.
Service of process upon an unauthorized foreign or alien
company.
(1) The purpose of this Section is to subject unauthorized
foreign and alien companies to the jurisdiction of courts of this State in
actions by or on behalf of insureds, reinsureds, or beneficiaries under
insurance
or reinsurance contracts. The Legislature declares that it is a subject of
concern that
many residents of this State or corporations authorized to do business in
this State hold policies of insurance or reinsurance issued by companies
not authorized to do business in this State, thus presenting to such
residents or corporations authorized to do business in this State the often
insuperable obstacle of
resorting to distant forums for
the purpose of asserting legal rights under such policies. In furtherance
of such State interest, the Legislature herein provides a method of
substituted service of process upon such companies and declares that in so
doing it exercises its power to protect its residents and corporations
authorized to do business in this State and to define, for
the purpose of this statute, what constitutes doing business in this State,
and also exercises powers and
privileges available to the State by virtue of Public Law 15, 79th Congress
of the United States, Chapter 20, 1st. Sess., S. 340, as amended, which
declares that the business of insurance and every person engaged therein
shall be subject to the laws of the several states.
(2) Any of the following acts in this State, effected by mail or
otherwise, by an unauthorized foreign or alien company: (a) the issuance or
delivery of contracts of insurance or reinsurance to residents of
this State or to corporations authorized to do business therein, (b) the
solicitation of applications for such contracts, (c) the collection of
premiums, membership fees, assessments or other considerations for such
contracts, or (d) any other transaction of business, is equivalent to and
shall constitute an appointment by such company, of the Director and his or her
successor or successors in office, to be its true and lawful attorney upon
whom may be served all lawful process in any action or proceeding against
it, arising out of such policy or contract of insurance or reinsurance, and
the acts
shall be a signification of its agreement that any such process against it
which is so served shall be of the same legal force and validity as if
served upon the company.
(3) Service of such process shall be made by delivering and leaving with
the Director a copy thereof and the payment to the Director of the fee
prescribed by this Code. The Director shall keep a record of all process so
served upon him or her. Such process shall be sufficient service upon such
foreign or alien company provided notice of such service and a copy of the
process are, within 10 days thereafter, sent by certified or registered
mail by the plaintiff’s attorney of record to the defendant at the last
known principal place of business of the defendant, and the defendant’s
receipt and the plaintiff’s attorney’s affidavit of compliance herewith are
filed with the Clerk of the Court in which such action is pending on or
before the return date of the process or within such further time as the court may allow.
(4) Service of process in any such action against any such company shall
in addition to the mode hereinabove described be valid and legal if served
upon any person within this State who, in this State on behalf of such
company, is
- (a) soliciting insurance or reinsurance, or
- (b) making, issuing, or delivering any policies or contracts of insurance or reinsurance, or
- (c) collecting or receiving any premium, membership fee, assessment or other consideration for insurance or reinsurance, or
- (d) in any manner aiding or assisting in doing any of the things enumerated in clauses (a), (b), or (c) of this subsection; and a copy of such process is within 10 days thereafter sent by certified or registered mail by the plaintiff’s attorney of record to the defendant at the last known principal place of business of the defendant and the defendant’s receipt and the plaintiff’s attorney’s affidavit of compliance herewith are filed with the clerk of the court in which such action is pending on or before the return date of the process or within such further time as the court may allow.
(5) Before any unauthorized foreign or alien company shall file or cause
to be filed any pleading in any action or proceeding, including any
arbitration, instituted
against it, such unauthorized company shall either (1) deposit with the
clerk of the court in which such action or proceeding is pending or with the
clerk of the court in the jurisdiction in which the arbitration is pending
cash
or securities or file with such clerk a bond with good and sufficient
sureties, to be approved by the court, in an amount to be fixed by the
court sufficient to secure the payment of any final judgment which may be
rendered in such action, proceeding, or arbitration; or (2) where the
unauthorized company continues to transact the business of insurance by issuing
new contracts of insurance or reinsurance, procure a certificate of authority
to
transact the business of insurance in this State.
The court in any action or proceeding, in which service is made
in the manner provided in subsections (3) or (4) may, in its discretion,
order such postponement as may be necessary to afford the defendant
reasonable opportunity to comply with the provisions of this subsection and
to defend such action.
Nothing in this Section is to be construed to prevent an unauthorized
foreign or alien company from filing a motion to quash process or to set
aside service thereof made in the manner provided in subsections (3) or (4)
on the ground either (a) that such unauthorized company has not done any of
the acts enumerated in subsection (2) or (b) that the person on whom
service was made pursuant to subsection (4) was not doing any of the acts
therein enumerated.
(6) In any action against an unauthorized foreign or alien company upon
a contract of insurance or reinsurance issued or delivered in this State to
a resident
thereof or to a corporation authorized to do business therein, if the
company has failed for 30 days after demand prior to the commencement
of the action to make payment in accordance with the terms of the contract,
and it appears to the court that such refusal was vexatious and without
reasonable cause, the court may allow to the plaintiff a reasonable
attorney fee and include such fee in any judgment that may be rendered in
such action. Such fee shall not exceed 12-1/2 per cent of the
amount which the court or jury finds the plaintiff is entitled to recover
against the insurer, but in no event shall such fee be less than $25.
Failure of a company to defend any such action shall
be deemed prima facie evidence that its failure to make payment was
vexatious and without reasonable cause.
(7) No plaintiff shall be entitled to a judgment by
default under this Section until the expiration of 30 days from the
date of the filing of the affidavit of compliance.
(8) The provisions of this Section shall not apply to any action
or proceeding against any unauthorized foreign or alien company arising out
of any contract of direct insurance
- (a) effected in accordance with Section 445, or
- (b) covering ocean marine, aircraft, railway insurance risks, or
- (c) against legal liability arising out of the ownership, operation or maintenance of any property having a permanent situs outside this State, or
- (d) against loss of or damage to any property having a permanent situs outside this State,
where such contract of insurance contains a provision designating the
Director and his or her successor or successors in office or a bona fide
resident of Illinois to be the true and lawful attorney of such
non-admitted insurer upon whom may be served all lawful process in any
action or proceeding arising out of any such contract of insurance or where
the insurer enters a general appearance in any such action or proceeding.
(9) Nothing in this Section contained shall limit or affect the right to
serve any process, notice or demand required or permitted by law to be
served upon any company in any other manner now or hereafter permitted by
law.
(Source: P.A. 90-53, eff. 7-3-97.)
(215 ILCS 5/123.1) (from Ch. 73, par. 735.1)
Sec. 123.1.
Service of process upon unauthorized insurers for false
advertising.
(1) (a) The purpose of this Act is to subject to the jurisdiction of the
Director of Insurance of this State and to the jurisdiction of the courts
of this State insurers not authorized to transact business in this State
which place in or send into this State any false advertising designed to
induce residents of this State to purchase insurance from insurers not
authorized to transact business in this State. The Legislature declares it
is in the interest of the citizens of this State who purchase insurance
from insurers which solicit insurance business in this State in the manner
set forth in the preceding sentence that such insurers be subject to the
provisions of this Act. In furtherance of such state interest, the
Legislature herein provides a method of substituted service of process upon
such insurers and declares that in so doing, it exercises its power to
protect its residents and also exercises powers and privileges available to
the State by virtue of Public Law 15, 79th Congress of the United States,
Chapter 20, 1st Session, S. 340, which declares that the business of
insurance and every person engaged therein shall be subject to the laws of
the several states; the authority provided herein to be in addition to any
existing powers of this State.
(b) The provisions of this Section shall be liberally construed.
(2) No unauthorized foreign or alien insurer of the kind described in
subsection (1) shall make, issue, circulate or cause to be made, issued or
circulated, to residents of this State any estimate, illustration,
circular, pamphlet, or letter, or cause to be made in any newspaper,
magazine or other publication or over any radio or television station, any
announcement or statement to such residents misrepresenting its financial
condition or the terms of any contracts issued or to be issued or the
benefits or advantages promised thereby, or the dividends or share of the
surplus to be received thereon in violation of Article XXVI, and whenever
the Director shall have reason to believe that any such insurer is engaging
in such unlawful advertising, it shall be his duty to give notice of such
fact by certified or registered mail to such insurer and to the insurance
supervisory official of the domiciliary state of such insurer. For the purpose
of this Section the domiciliary state of an alien insurer shall be deemed to be
the state of entry or the state of the principal office in the United States.
(3) If after thirty days following the giving of the notice mentioned in
subsection (2) such insurer has failed to cease making, issuing, or
circulating such false misrepresentations or causing the same to be made,
issued or circulated in this State, and if the Director has reason to
believe that a proceeding by him in respect to such matters would be to the
interest of the public, and that such insurer is issuing or delivering
contracts of insurance to residents of this State or collecting premiums on
such contracts or doing any of the acts enumerated in subsection (4), he
shall take action against such insurer under Article XXVI.
(4) (a) Any of the following acts in this State, effected by mail or
otherwise, by any such unauthorized foreign or alien insurer:
- (i) the issuance or delivery of contracts or insurance to residents of this State; or
- (ii) the solicitation of applications for such contracts; or
- (iii) the collection of premiums, membership fees, assessments or other considerations for such contracts; or
- (iv) any other transaction of insurance business;
- is equivalent to and shall constitute an appointment by such insurer of the
Director and his successor or successors in office, to be its true and lawful
attorney, upon whom may be served all statements of charges, notices and lawful
process in any proceeding instituted in respect to the misrepresentations set
forth in subsection (2) hereof under the provisions of Article XXVI, or in any
action, suit or proceeding for the recovery of any penalty therein provided,
and any such act shall be signification of its agreement that such service of
statement of charges, notices or process is of the same legal force and
validity as personal service of such statement of charges, notices or process
in this State, upon such insurer.
(b) Service of a statement of charges and notices under Article XXVI
shall be made by any deputy or employee of the Department of Insurance
delivering to and leaving with the Director or some person in apparent
charge of his office, two copies thereof. Service of process issued by any
court in any action, suit or proceeding to collect any penalty under
Article XXVI provided, shall be made by delivering and leaving with the
Director, or some person in apparent charge of his office, two copies
thereof. The Director shall forthwith cause to be mailed by certified
or registered mail one of the copies of such statement of charges, notices or
process to the defendant at its last known principal place of business, and
shall keep a record of all statements of charges, notices and process so
served. Such service of statement of charges, notices or process shall be
sufficient provided they shall have been so mailed and the defendant’s receipt
or receipt issued by the post office with which the letter is certified or
registered, showing the name of the sender of the letter and the name and
address of the person to whom the letter is addressed, and the affidavit of the
person mailing such letter showing a compliance herewith are filed with the
Director in the case of any statement of charges or notices, or with the clerk
of the court in which such action is pending in the case of any process, on or
before the date the defendant is required to appear or within such further time
as may be allowed.
(c) Service of statement of charges, notices and process in any such
proceeding, action or suit shall in addition to the manner provided in
paragraph (b) of this subsection be valid if served upon any person within
this State who on behalf of such insurer is
- (i) soliciting insurance; or
- (ii) making, issuing or delivering any policies or contracts of insurance; or
- (iii) collecting or receiving in this State any premium, membership fee, assessment or other consideration for insurance; or
- (iv) in any manner aiding or assisting in doing any of the things enumerated in clauses (i), (ii) or (iii) of this paragraph;
and a copy of such statement of charges, notices or process is sent within
ten days thereafter by certified or registered mail by or on behalf
of the Director to the defendant at the last known principal place of business
of the defendant, and the defendant’s receipt, or the receipt issued by the
post office with which the letter is certified or registered, showing the name
of the sender of the letter, the name and address of the person to whom the
letter is addressed, and the affidavit of the person mailing the same showing a
compliance herewith, are filed with the Director in the case of any statement
of charges or notices, or with the clerk of the court in which such action is
pending in the case of any process, on or before the date the defendant is
required to appear or within such further time as the court may allow.
(d) No cease or desist order or judgment by default under this section
shall be entered until the expiration of thirty days from the date of the
filing of the affidavit of compliance.
(e) Service of process and notice under the provisions of this section
shall be in addition to all other methods of service provided by law, and
nothing in this section shall limit or prohibit the right to serve any
statement of charges, notices or process upon any insurer in any other
manner now or hereafter permitted by law.
(5) When used in this Act, “residents” shall mean and include person,
partnership or corporation, domestic, alien or foreign.
(Source: P.A. 83-598.)
(215 ILCS 5/123.3) (from Ch. 73, par. 735.3)
Sec. 123.3.
Insurance Sales by Companies in Hazardous Financial
Condition Prohibited. Notwithstanding any other provision of this Code, no
unauthorized foreign or alien company officer, director, trustee, agent or
employee of such company may renew, issue, or deliver or cause to be
renewed, issued or delivered any policy, contract, or certificate of
insurance for which a premium is charged or collected if the Director of
Insurance has found that such company is in a hazardous financial condition
and such officer, director, trustee, agent or employee is aware of such finding.
If upon request of the Director, such company officer, director, trustee
or employee is unable or unwilling to submit to the Director a copy of such
unauthorized company’s most recent financial statement, such unwillingness
or inability shall be deemed prima facie evidence of a hazardous financial condition.
However, a finding of hazardous financial condition does not prevent the
issuance or renewal of a policy when an insured or owner exercises an
option granted to him under an existing policy to obtain new, renewed or
converted insurance coverage.
Any company officer, director, trustee, agent, or employee of such
company violating this Section shall be guilty of a Class A misdemeanor.
(Source: P.A. 85-1139.)