Illinois Compiled Statutes
215 ILCS 5/ - Illinois Insurance Code.
Article XXXIII 1/2 - Life and Health Insurance Guaranty Association

(215 ILCS 5/Art. XXXIII.5 heading)

 
(215 ILCS 5/531.01) (from Ch. 73, par. 1065.80-1)
Sec. 531.01.

Title.) This Article is known and may be
cited as the Illinois Life and Health Insurance Guaranty Association
Law.

(Source: P.A. 81-899.)
 
(215 ILCS 5/531.01a) (from Ch. 73, par. 1065.80-1a)
Sec. 531.01a.
Existing Liability.
Any liabilities of the
Association for any member company
which was an insolvent insurer as defined by this Article prior to January
1, 1986 shall be
determined under the law which was in effect at the time the member company
became an insolvent insurer
as if there had been no amendment to that law. Any liabilities of the
Association for a member company which became an insolvent insurer on or after
January 1, 1986, shall be
determined under the law in effect at the time when the member became an
insolvent insurer, notwithstanding any prior law.
On or after January 1, 1986, any assessments made against other member
companies to meet Association liabilities shall be made based on
the law which was in effect when the member company was an impaired or
insolvent insurer as defined by this Article. If different assessment
methods are used in any one year, those assessments shall be aggregated for
purposes of calculating the
aggregate assessment under Sections 531.09 and 531.13.

(Source: P.A. 84-1035.)
 
(215 ILCS 5/531.02) (from Ch. 73, par. 1065.80-2)
Sec. 531.02. Purpose. The purpose of this Article is to protect,
subject to certain limitations, the persons specified in paragraph (1) of
Section 531.03 against failure
in the performance of contractual obligations, under life, health, and annuity policies, plans, or contracts and health or medical care service
contracts specified in paragraph (2) of Section 531.03, due to the
impairment or insolvency of the
member insurer issuing such policies, plans, or contracts. To provide this protection,
(1) an association of member insurers is created to enable the guaranty of payment
of benefits and of continuation of coverages, (2) members of the Association
are subject to assessment to provide funds to carry out the purpose of this
Article, and (3) the Association is authorized to assist the Director, in
the prescribed manner, in the detection and prevention of member insurer impairments
or insolvencies.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
Sec. 531.03. Coverage and limitations.
(1) This Article shall provide
coverage for the policies and contracts specified in subsection (2) of this
Section:
(2)(a) This Article shall provide coverage to the persons
specified in subsection (1) of this Section for policies or contracts of direct, (i)
nongroup life insurance, health insurance (that, for the purposes of this Article, includes health maintenance organization subscriber contracts and certificates), annuities and
supplemental contracts to any of these, (ii) for
certificates under direct group policies or contracts, (iii) for unallocated
annuity contracts and (iv) for contracts to furnish
health care services and subscription certificates for medical or health
care services issued by persons licensed to transact insurance business
in this State under this Code.
Annuity contracts and certificates under group annuity contracts include
but are not limited to guaranteed investment contracts, deposit
administration contracts, unallocated funding agreements, allocated funding
agreements, structured settlement agreements, lottery contracts
and any immediate or deferred annuity contracts.
(b) Except as otherwise provided in paragraph (c) of this subsection, this Article shall not provide coverage for:
(c) The exclusion from coverage referenced in subdivision (iii) of paragraph (b) of this subsection shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or other health insurance benefits.
(3) The benefits for which the Association may become liable shall in
no event exceed the lesser of:
In no event shall the Association be obligated to cover more than (1) an aggregate of $300,000 in benefits with respect to any one life under subparagraphs (i), (ii), and (iii) of this paragraph (b) except with respect to benefits for health benefit plans under item (B) of subparagraph (i) of this paragraph (b), in which case the aggregate liability of the Association shall not exceed $500,000 with respect to any one individual or (2) with respect to one owner of multiple nongroup policies of life insurance, whether the policy or contract owner is an individual, firm, corporation, or other person and whether the persons insured are officers, managers, employees, or other persons, $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.
The limitations set forth in this subsection are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the Association's obligations under this Article may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights.
For purposes of this Article, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.
(4) In performing its obligations to provide coverage under Section 531.08 of this Code, the Association shall not be required to guarantee, assume, reinsure, reissue, or perform or cause to be guaranteed, assumed, reinsured, reissued, or performed the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.
(Source: P.A. 100-687, eff. 8-3-18; 100-863, eff. 8-14-18.)
 
(215 ILCS 5/531.04) (from Ch. 73, par. 1065.80-4)
Sec. 531.04. Construction. This Article shall be construed to
effect the purpose under Section 531.02.

(Source: P.A. 96-1450, eff. 8-20-10.)
 
(215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
Sec. 531.05. Definitions. As used in this Act:
"Account" means either of the 2 accounts created under Section
531.06.
"Association" means the Illinois Life and Health Insurance
Guaranty Association created under Section 531.06.
"Authorized assessment" or the term "authorized" when used in the context of assessments means a resolution by the Board of Directors has been passed whereby an assessment shall be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed.
"Benefit plan" means a specific employee, union, or association of natural persons benefit plan.
"Called assessment" or the term "called" when used in the context of assessments means that a notice has been issued by the Association to member insurers requiring that an authorized assessment be paid within the time frame set forth within the notice. An authorized assessment becomes a called assessment when notice is mailed by the Association to member insurers.
"Director" means the Director of Insurance of this State.
"Contractual obligation" means any obligation under a policy or
contract or certificate under a group policy or contract, or portion
thereof for which coverage is provided under Section 531.03.
"Covered person" means any person who is entitled to the
protection of the Association as described in Section 531.02.
"Covered contract" or "covered policy" means any policy or contract within the scope
of this Article under Section 531.03.
"Extra-contractual claims" shall include, but are not limited to, claims relating to bad faith in the payment of claims, punitive or exemplary damages, or attorneys' fees and costs.
"Health benefit plan" means any hospital or medical expense policy or certificate or
health maintenance organization subscriber contract or any other similar health
contract. "Health benefit plan" does not include:
"Impaired insurer" means (A) a member insurer which, after the effective date of this amendatory Act of the 96th General Assembly, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction or (B) a member insurer deemed by the Director after the effective date of this amendatory Act of the 96th General Assembly to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.
"Insolvent insurer" means a member insurer that, after the effective date of this amendatory Act of the 96th General Assembly, is placed under a final order of liquidation by a court of competent jurisdiction with a finding of insolvency.
"Member insurer" means an insurer or health maintenance organization licensed or holding a certificate of authority to transact in this State any kind of insurance or health maintenance organization business for which coverage is provided under Section 531.03 of this Code and includes an insurer or health maintenance organization whose license or certificate of authority in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn or whose certificate of authority may have been suspended pursuant to Section 119 of this Code, but does not include:
"Moody's Corporate Bond Yield Average" means the Monthly Average
Corporates as published by Moody's Investors Service, Inc., or any successor
thereto.
"Owner" of a policy or contract and "policyholder", "policy owner", and "contract owner" mean the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms owner, contract owner, policyholder, and policy owner do not include persons with a mere beneficial interest in a policy or contract.
"Person" means an individual, corporation, limited liability company, partnership, association, governmental body or entity, or voluntary organization.
"Plan sponsor" means:
"Premiums" mean amounts or considerations, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits.
"Premiums" does not include:
"Principal place of business" of a plan sponsor or a person other than a natural person means the single state in which the natural persons who establish policy for the direction, control, and coordination of the operations of the entity as a whole primarily exercise that function, determined by the Association in its reasonable judgment by considering the following factors:
The principal place of business of a plan sponsor of a benefit plan described in paragraph (3) of the definition of "plan sponsor" shall be deemed to be the principal place of business of the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.
"Receivership court" means the court in the insolvent or impaired insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation of the member insurer.
"Resident" means a person to whom a contractual obligation is owed and who resides in this State on the date of entry of a court order that determines a member insurer to be an impaired insurer or a court order that determines a member insurer to be an insolvent insurer. A person may be a resident of only one state, which in the case of a person other than a natural person shall be its principal place of business. Citizens of the United States that are either (i) residents of foreign countries or (ii) residents of United States possessions, territories, or protectorates that do not have an association similar to the Association created by this Article, shall be deemed residents of the state of domicile of the member insurer that issued the policies or contracts.
"Structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant.
"State" means a state, the District of Columbia, Puerto Rico, and a United States possession, territory, or protectorate.
"Supplemental contract" means a written agreement entered into for the distribution of proceeds under a life, health, or annuity policy or a life, health, or annuity contract.
"Unallocated annuity contract" means any annuity contract or group
annuity certificate which is not issued to and owned by an individual,
except to the extent of any annuity benefits guaranteed to an individual by
an insurer under such contract or certificate.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.06) (from Ch. 73, par. 1065.80-6)
Sec. 531.06. Creation of the Association. There is created a
non-profit legal entity to be known as the Illinois Life and Health
Insurance Guaranty Association. All member insurers are and must remain
members of the Association as a condition of their authority to transact
insurance or a health maintenance organization business in this State. The Association must perform its functions under
the plan of operation established and approved under Section 531.10 and must
exercise its powers through a board of directors established under
Section 531.07. For purposes of administration and assessment, the Association
must maintain 2 accounts:
The Association shall be supervised by the Director
and is subject to the applicable provisions of the Illinois Insurance
Code. Meetings or records of the Association may be opened to the public upon majority vote of the board of directors of the Association.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.07) (from Ch. 73, par. 1065.80-7)
Sec. 531.07. Board of Directors.) The board of directors of the
Association consists of not less than 7 nor more than 11 members serving
terms as established in the plan of operation. The insurer members of the board
are to be selected by member insurers subject to the approval of the
Director. In addition, 2 persons who must be public representatives may be appointed by the Director to the board of directors. A public representative may not be an officer, director, or employee of an insurance company or a health maintenance organization or any person engaged in the business of insurance. Vacancies on the board must be filled for the remaining period
of the term in the manner described in the plan of operation.
In approving selections or in appointing members to the board, the
Director must consider, whether all member insurers are
fairly represented.
Members of the board may be reimbursed from the assets of the Association
for expenses incurred by them as members of the board of directors but
members of the board may not otherwise be compensated by the Association for
their services.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
Sec. 531.08. Powers and duties of the Association.
(a) In addition to
the powers and duties enumerated in other Sections of this Article:
(b) In providing the substitute coverage required under subparagraph (iii) of paragraph (B) of item (2) of subsection (a)
of this Section, the Association may offer either to reissue the
terminated coverage or to issue an alternative policy or contract at actuarially justified rates, subject to the prior approval of the Director.
Alternative or reissued policies or contracts shall be offered without requiring
evidence of insurability, and shall not provide for any waiting period or
exclusion that would not have applied under the terminated policy or contract.
The Association may reinsure any alternative or reissued policy or contract.
Alternative policies or contracts adopted by the Association shall be subject
to the approval of the Director. The Association may adopt alternative
policies or contracts of various types for future issuance without regard to any
particular impairment or insolvency.
Alternative policies or contracts shall contain at least the minimum statutory
provisions required in this State and provide benefits that shall not be
unreasonable in relation to the premium charged. The
Association shall set the premium in accordance with a table of rates which
it shall adopt. The premium shall reflect the amount of insurance to be
provided and the age and class of risk of each insured, but shall not
reflect any changes in the health of the insured after the original policy or contract
was last underwritten.
Any alternative policy or contract issued by the Association shall provide
coverage of a type similar to that of the policy or contract issued by the impaired or
insolvent insurer, as determined by the Association.
(c) If the Association elects to reissue terminated coverage at a
premium rate different from that charged under the terminated policy or contract, the
premium shall be actuarially justified and set by the Association in accordance with the amount of
insurance or coverage provided and the age and class of risk, subject to approval of
the Director.
(d) The Association's obligations with respect to coverage under any
policy or contract of the impaired or insolvent insurer or under any reissued or
alternative policy or contract shall cease on the date such coverage or policy or contract is
replaced by another similar policy or contract by the policyholder, the insured, the enrollee, or the
Association.
(e) When proceeding under this Section with
respect to any policy or contract carrying guaranteed minimum interest
rates, the Association shall assure the payment or crediting of a rate of
interest consistent with subparagraph (2)(b)(iii)(B) of Section 531.03.
(f) Nonpayment of premiums thirty-one days after the date required under
the terms of any guaranteed, assumed, alternative or reissued policy or
contract or substitute coverage shall terminate the Association's
obligations under such policy, contract, or coverage under this Act with respect to
such policy, contract, or coverage, except with respect to any claims incurred or any
net cash surrender value which may be due in accordance with the provisions of
this Act.
(g) Premiums due for coverage after entry of an order of liquidation of
an insolvent insurer shall belong to and be payable at the direction of the
Association,
and the Association shall be liable for unearned premiums due to policy or
contract owners arising after the entry of such order.
(h) In carrying out its duties under paragraph (2) of subsection (a) of this Section, the Association may:
(i) There shall be no liability on the part of and no cause of action
shall arise against the Association or against any transferee from the
Association in connection with the transfer by reinsurance or otherwise of
all or any part of an impaired or insolvent insurer's business by reason of
any action taken or any failure to take any action by the impaired or
insolvent insurer at any time.
(j) If the Association fails to act within a reasonable period of
time as provided in subsection (2) of this Section with respect to an
insolvent insurer, the
Director shall have the powers and duties of the Association under this
Act with regard to such insolvent insurers.
(k) The Association or its designated representatives
may render assistance and advice to the
Director, upon his request, concerning rehabilitation, payment of
claims, continuations of coverage, or the performance of other
contractual obligations of any impaired or insolvent insurer.
(l) The Association shall have standing to appear or intervene before a court or agency in this State with jurisdiction over an impaired or insolvent insurer concerning which the Association is or may become obligated under this Article or with jurisdiction over any person or property against which the Association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the Association, including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The Association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the Association is or may become obligated or with jurisdiction over any person or property against whom the Association may have rights through subrogation or otherwise.
(m)(1) A person receiving benefits under this Article shall be deemed to have assigned the rights under and any causes of action against any person for losses arising under, resulting from, or otherwise relating to the covered policy or contract to the Association to the extent of the benefits received because of this Article, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The Association may require an assignment to it of such rights and cause of action by any enrollee, payee, policy, or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this Article upon the person.
(2) The subrogation rights of the Association under this subsection
have the same priority against the assets of the impaired or insolvent insurer as
that possessed by the person entitled to receive benefits under this
Article.
(3) In addition to paragraphs (1) and (2), the Association shall have all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts, including without limitation, in the case of a structured settlement annuity, any rights of the owner, beneficiary, enrollee, or payee of the annuity to the extent of benefits received pursuant to this Article, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under Internal Revenue Code Section 130.
(4) If the preceding provisions of this subsection (m) are invalid or ineffective with respect to any person or claim for any reason, then the amount payable by the Association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the Association.
(5) If the Association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the Association has rights as described in the preceding paragraphs of this subsection (10), then the person shall pay to the Association the portion of the recovery attributable to the policies or contracts, or portion thereof, covered by the Association.
(n) The Association may:

(1) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this Article.

(2) Sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under Section 531.09. The Association shall not be liable for punitive or exemplary damages.

(3) Borrow money to effect the purposes of this Article. Any notes or other evidence of indebtedness of the Association not in default are legal investments for domestic member insurers and may be carried as admitted assets.

(4) Employ or retain such persons as are necessary to handle the financial transactions of the Association, and to perform such other functions as become necessary or proper under this Article.

(5) Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association.

(6) Take such legal action as may be necessary to avoid payment of improper claims.

(7) Exercise, for the purposes of this Article and to the extent approved by the Director, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the Association issue policies or contracts other than those issued to perform the contractual obligations of the impaired or insolvent insurer.

(8) Exercise all the rights of the Director under Section 193(4) of this Code with respect to covered policies after the association becomes obligated by statute.
(o) With respect to covered policies for which the Association becomes
obligated after an entry of an order of liquidation or rehabilitation,
the Association may
elect to succeed to the rights of the insolvent insurer arising after the
date of the order of liquidation or rehabilitation under any contract
of reinsurance to which
the insolvent insurer was a party, to the extent that such contract
provides coverage for losses occurring after the date of the order of
liquidation or rehabilitation. As a condition to making this election,
the Association must pay all unpaid premiums due under the contract for
coverage relating to periods before and after the date of the order of
liquidation or rehabilitation.
(p) A deposit in this State, held pursuant to law or required by the Director for the benefit of creditors, including policy owners or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this State or in a reciprocal state, pursuant to Article XIII 1/2 of this Code, shall be promptly paid to the Association. The Association shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy owners' or contract owners' claims related to that insolvency for which the Association has provided statutory benefits by the aggregate amount of all policy owners' or contract owners' claims in this State related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the Association less the amount retained pursuant to this subsection (p). Any amount so paid to the Association and retained by it shall be treated as a distribution of estate assets pursuant to applicable State receivership law dealing with early access disbursements.
(q) The Board of Directors of the Association shall have discretion and may exercise reasonable business judgment to determine the means by which the Association is to provide the benefits of this Article in an economical and efficient manner.
(r) Where the Association has arranged or offered to provide the benefits of this Article to a covered person under a plan or arrangement that fulfills the Association's obligations under this Article, the person shall not be entitled to benefits from the Association in addition to or other than those provided under the plan or arrangement.
(s) Venue in a suit against the Association arising under the Article shall be in Cook County. The Association shall not be required to give any appeal bond in an appeal that relates to a cause of action arising under this Article.
(t) The Association may join an organization of one or more other State associations of similar purposes to further the purposes and administer the powers and duties of the Association.
(u) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under subsections (1) or (2), the Association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:
 
(215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
Sec. 531.09. Assessments.
(1) For the purpose of providing the funds
necessary to carry out the powers and duties of the Association, the board
of directors shall assess the member insurers, separately for each account, at such
times and for such amounts as the board finds necessary. Assessments shall
be due not less than 30 days after written notice to the member insurers
and shall accrue interest from the due date at such adjusted rate as is
established under Section 6621 of Chapter 26 of the United States Code and
such interest shall be compounded daily.
(2) There shall be 2 classes of assessments, as follows:
(3)(a) The amount of any Class A assessment shall be determined at the discretion of the board of directors and such assessments shall be authorized and called on a non-pro rata basis. The amount of any Class B
assessment, except for assessments related to long-term care insurance, shall be allocated for assessment
purposes among the accounts
and subaccounts pursuant to an allocation formula which may be based on
the premiums or reserves of the impaired or insolvent insurer or any other
standard deemed by the board in its sole discretion as being fair and
reasonable under the circumstances.
(b) Class B assessments against member insurers for each account and
subaccount shall
be in the proportion that the premiums received on business in this State
by each assessed member insurer on policies or contracts covered by
each account or subaccount for the three most recent calendar years
for which information is available preceding the year in which the member insurer
became impaired or insolvent, as the case may be, bears to such premiums
received on business in this State for such calendar years by all assessed
member insurers.
(b-5) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the Director. The methodology shall provide for 50% of the assessment to be allocated to accident and health member insurers and 50% to be allocated to life and annuity member insurers.
(c) Assessments for funds to meet the requirements of the Association
with respect to an impaired or insolvent insurer shall not be made until
necessary to implement the purposes of this Article. Classification
of assessments
under subsection (2) and computations of assessments under this subsection
shall be made with a reasonable degree of accuracy, recognizing that exact
determinations may not always be possible.
(4) The Association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated or deferred in whole or in part the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this Section. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the Association.
(5) (a) Subject to the provisions of this paragraph, the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in one calendar year exceed 2% of that member insurer's average annual premiums received in this State on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.
If 2 or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in subparagraph (a) of this paragraph shall be equal and limited to the higher of the 3-year average annual premiums for the applicable subaccount or account as calculated pursuant to this Section.
If the maximum assessment, together with the other assets of the Association in an account, does not provide in one year in either account an amount sufficient to carry out the responsibilities of the Association, the necessary additional funds shall be assessed as soon thereafter as permitted by this Article.
(b) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.
(c) If the maximum assessment for a subaccount of the life insurance and annuity account in one year does not provide an amount sufficient to carry out the responsibilities of the Association, then pursuant to paragraph (b) of subsection (3), the board shall assess the other subaccounts of the life insurance and annuity account for the necessary additional amount, subject to the maximum stated in paragraph (a) of this subsection.
(6) The board may, by an equitable method as established in the
plan of operation, refund to member insurers, in proportion to the contribution
of each member insurer to that account, the amount by which the assets of the account
exceed the amount the board finds is necessary to carry out during the coming
year the obligations of the Association with regard to that account, including
assets accruing from net realized gains and income from investments. A
reasonable amount may be retained in any account to provide funds for the
continuing expenses of the Association and for future losses.
(7) An assessment is deemed to occur on the date upon which the board
votes such assessment. The board may defer calling the payment of the
assessment or may call for payment in one or more installments.
(8) It is proper for any member insurer, in determining its premium
rates and policy owner dividends as to any kind of insurance or health maintenance organization business within the scope of
this Article, to consider the amount reasonably necessary to meet its assessment
obligations under this Article.
(9) The Association must issue to each member insurer paying a
Class B assessment
under this Article a certificate of contribution,
in a form acceptable to the
Director, for the amount of the assessment so paid. All outstanding certificates
are of equal
dignity and priority without reference to amounts or dates of issue. A certificate
of contribution may be shown by the member insurer in its financial statement as an asset
in such form and for such amount, if any, and period of time as the Director
may approve, provided the member insurer shall in any event at its option have
the right to show a certificate of contribution as an admitted asset at
percentages of the original face amount for calendar years as follows:
100% for the calendar year after the year of issuance;
80% for the second calendar year after the year of issuance;
60% for the third calendar year after the year of issuance;
40% for the fourth calendar year after the year of issuance;
20% for the fifth calendar year after the year of issuance.
(10) The Association may request information of member insurers in order to aid in the exercise of its power under this Section and member insurers shall promptly comply with a request.
(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
Sec. 531.10. Plan of operation.
(1)(a) The Association must
submit to the Director a plan of operation and any amendments thereto necessary
or suitable to assure the fair, reasonable, and equitable administration of the
Association. The plan of operation and any amendments thereto become effective
upon approval in writing by the Director.
(b) If the Association fails to submit a suitable plan of operation
within 180 days following the effective date of this Article or if at any time
thereafter the Association fails to submit suitable amendments to the plan, the
Director may, after notice and hearing, adopt and promulgate such reasonable
rules as are necessary or advisable to effectuate the provisions of this Article.
Such rules are in force until modified by the Director or superseded by a plan
submitted by the Association and approved by the Director.
(2) All member insurers must comply with the plan of operation.
(3) The plan of operation must, in addition to requirements enumerated
elsewhere in this Article:
(4) The plan of operation shall establish a procedure for protest by
any member insurer of assessments made by the Association pursuant to
Section 531.09. Such procedures shall require that:
(5) The plan of operation may provide that any or all powers and duties
of the Association, except those under paragraph (3) of subsection (n)
of Section 531.08 and Section 531.09 are delegated to a corporation,
association or other organization which performs or will perform functions
similar to those of this Association, or its equivalent, in 2 or more states.
Such a corporation, association or organization shall be reimbursed for any
payments made on behalf of the Association and shall be paid for its
performance of any function of the Association. A delegation under this
subsection shall take effect only with the approval of both the Board of
Directors and the Director, and may be made only to a corporation, association
or organization which extends protection not substantially less favorable and
effective than that provided by this Act.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)
Sec. 531.11. Duties and powers of the Director. In addition to
the duties and powers enumerated elsewhere in this Article:
(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
Sec. 531.12. Prevention of Insolvencies. To aid in the detection and
prevention of member insurer insolvencies or impairments:
(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
Sec. 531.13. Tax offset. In the event the aggregate Class A, B and C
assessments for all member insurers do not exceed $3,000,000 in any one
calendar year, no member insurer shall receive a tax offset. However, for
any one calendar year before 1998 in which the
total of such assessments exceeds $3,000,000,
the amount in excess of $3,000,000 shall be subject to a tax offset to the
extent of 20% of the amount of such assessment for each of the 5
calendar
years following the year in which such assessment was paid, and ending prior
to January 1, 2003, and each member
insurer may offset the proportionate amount of such excess paid by the member insurer
against its liabilities for the tax imposed by subsections (a) and (b)
of Section 201 of the Illinois
Income Tax Act. The provisions of this Section shall expire and be given no
effect for any tax period commencing on and after January 1, 2003.

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
Sec. 531.14. Miscellaneous provisions.
(1) Nothing in this
Article may be construed to reduce the liability for unpaid assessments of the insured
of an impaired or insolvent insurer operating under a plan with assessment liability.
(2) Records must be kept of all negotiations and meetings in which
the Association or its representatives are involved to discuss the activities of the
Association in carrying out its powers and duties under Section 531.08. Records of such
negotiations or meetings may be made public only upon the termination of a
liquidation, rehabilitation, or conservation proceeding involving the impaired
or insolvent insurer, upon the termination of the impairment or insolvency
of the insurer, or upon the order
of a court of competent jurisdiction. Nothing in this paragraph (2) limits the
duty of the Association to render a report of its activities under Section
531.15.
(3) For the purpose of carrying out its obligations under this Article,
the Association is deemed to be a creditor of the impaired or insolvent
insurer to the extent of assets attributable to covered policies or contracts reduced by any
amounts to which the Association is entitled as subrogee (under subsection (m)
of Section 531.08). All assets of the impaired or insolvent insurer
attributable to covered policies or contracts must be used to continue all covered policies
and pay all contractual obligations of the impaired insurer as required by this
Article. "Assets attributable to covered policies or contracts", as used in this paragraph
(3), is that proportion of the
assets which the reserves that should have been established
for such policies or contracts bear to the reserve that should have been
established for all policies of
insurance or health benefit plans written by the impaired or insolvent insurer.
(4) (a) Prior to the termination of any liquidation, rehabilitation,
or conservation proceeding, the court may take into consideration the contributions
of the respective parties, including the Association, the shareholders, contract owners, certificate holders, enrollees, and policy owners
of the impaired or insolvent insurer, and any other party with
a bona fide interest,
in making an equitable distribution of the ownership rights of such impaired
or insolvent
insurer. In such a determination, consideration must be given to the welfare of the
policy owners, contract owners, certificate holders, and enrollees of the continuing or successor insurer.
(b) No distribution to stockholders, if any, of an impaired or insolvent insurer
may be made until and unless the total
amount of valid claims of the Association for funds expended with interest in carrying
out its powers and duties under Section 531.08, with respect to such member insurer
have been fully recovered by the Association.
(5) (a) If an order for liquidation or rehabilitation of
a member insurer
domiciled in this State has been entered, the receiver appointed under such
order has a right to recover on behalf of the member insurer, from any affiliate that
controlled it, the amount of distributions, other than stock dividends paid by
the member insurer on its capital stock, made at any time during the 5 years preceding
the petition for liquidation or rehabilitation subject to the limitations of
paragraphs (b) to (d).
(b) No such dividend is recoverable if the member insurer shows that when
paid the distribution was lawful and reasonable, and that the member insurer did not
know and could not reasonably have known that the distribution might adversely affect
the ability of the member insurer to fulfill its contractual obligations.
(c) Any person who as an affiliate that controlled the member insurer at
the time the distributions were paid is liable up to the amount of distributions
he received. Any person who was an affiliate that controlled the member insurer at the
time the distributions were declared, is liable up to the amount of distributions
he would have received if they had been paid immediately. If 2 persons are
liable with respect to the same distributions, they are jointly and severally liable.
(d) The maximum amount recoverable under subsection (5) of this Section is
the amount needed in excess of all other available assets of the insolvent insurer
to pay the contractual obligations of the insolvent insurer.
(e) If any person liable under paragraph (c) of subsection (5) of this
Section is insolvent, all its
affiliates that controlled it at the time the dividend was paid are jointly and
severally liable for any resulting deficiency in the amount recovered from
the insolvent affiliate.
(6) As a creditor of the impaired or insolvent insurer as established in subsection (3) of this Section and consistent with subsection (2) of Section 205 of this Code, the Association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this Article. If the liquidator has not, within 120 days after a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the Association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets.
(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.15) (from Ch. 73, par. 1065.80-15)
Sec. 531.15.
Examination of the Association - Annual Report.
The
Association shall be subject to examination and regulation by the Director.
The board of directors must submit to the Director, not later than the
first day of the fifth month following the end of the Association's fiscal
year, a financial report for such fiscal year in a
form acceptable to the Director and a report of its
activities during such fiscal year.

(Source: P.A. 86-753.)
 
(215 ILCS 5/531.16) (from Ch. 73, par. 1065.80-16)
Sec. 531.16.

Tax Exemptions.) The Association is exempt from payment of
all fees and all taxes levied by this State or any of its subdivisions, except taxes
levied on real property.

(Source: P.A. 81-899.)
 
(215 ILCS 5/531.17) (from Ch. 73, par. 1065.80-17)
Sec. 531.17.

Immunity.) There is no liability on the part of and
no cause of action of any nature may arise against any member insurer or its agents
or employees, the Association or its agents or employees, members of the board of
directors, or the Director or his representatives, for any action taken by them
in the performance of their powers and duties under this Article.

(Source: P.A. 81-899.)
 
(215 ILCS 5/531.18) (from Ch. 73, par. 1065.80-18)
Sec. 531.18. Stay of Proceedings - Reopening Default Judgments.)
All proceedings in which the insolvent insurer is a party in any court in this
State shall be stayed 180 days from the date an order of liquidation,
rehabilitation, or conservation is final to permit proper legal action by the
Association on any matters germane to its powers or duties. As to a judgment under
any decision, order, verdict, or finding based on default the Association may apply
to have such judgment set aside by the same court that made such judgment and must
be permitted to defend against such suit on the merits.

(Source: P.A. 96-1450, eff. 8-20-10.)
 
(215 ILCS 5/531.19) (from Ch. 73, par. 1065.80-19)
Sec. 531.19. Prohibited advertisement of action of the Insurance Guaranty
Association in sale of insurance.
(a) No person, including a member insurer,
agent
or affiliate of a member insurer shall make, publish, disseminate, circulate,
or place before the public, or cause directly or indirectly, to be made,
published, disseminated, circulated or placed before the public, in any
newspaper, magazine or other publication, or in the form of a notice, circular,
pamphlet, letter or poster, or over any radio station or television station,
or in any other way, any advertisement, announcement or statement, written or
oral, which
uses the existence of the Insurance Guaranty Association of this State for
the purpose of sales, solicitation or inducement to purchase any form of
insurance or other coverage covered by this Article; provided, however, that this Section
shall not apply to the Illinois Life and Health Guaranty Association or
any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.
(b) Within 180 days of August 16,
1993, the Association shall prepare a summary document describing the general
purposes and current limitations of this Article and complying with subsection
(c). This document shall be submitted to the Director for approval. Sixty
days after receiving approval, no member insurer may deliver a policy or contract
described in subparagraph (a) of paragraph (2) of Section 531.03 and not
excluded under subparagraph (b) of that Section to a policy owner,
contract owner, certificate holder, or enrollee unless the document is delivered to the policy owner, contract owner, certificate
holder, or enrollee prior to or at the time of delivery of the policy or contract. The document should also be available upon request
by
a policy owner, contract owner, certificate holder, or enrollee. The distribution, delivery, or contents or interpretation of
this document shall not mean that either the policy or the contract or the policy owner, contract owner, certificate
holder, or enrollee thereof would be covered in the event of the impairment or insolvency of
a member insurer. The description document shall be revised by the Association
as amendments to this Article may require. Failure to receive this document
does not give the policy owner, contract owner, certificate holder, enrollee, or insured
any greater rights than those stated in this Article.
(c) The document prepared under subsection (b) shall contain a clear and
conspicuous disclaimer on its face. The Director shall promulgate a rule
establishing the form and content of the disclaimer. The disclaimer shall:
(d) (Blank).

(Source: P.A. 100-687, eff. 8-3-18.)
 
(215 ILCS 5/531.20)
Sec. 531.20. Merger of Illinois Health Maintenance Organization Guaranty Association with and into the Illinois Life and Health Insurance Guaranty Association. In order to provide for the merger of the Illinois Health Maintenance Organization Guaranty Association with and into the Illinois Life and Health Insurance Guaranty Association, the following shall apply:
(Source: P.A. 100-687, eff. 8-3-18.)

Structure Illinois Compiled Statutes