Illinois Compiled Statutes
Chapter 215 - INSURANCE
215 ILCS 107/ - Producer Controlled Insurer Act.

(215 ILCS 107/1)
Sec. 1.
Short title.
This Act may be cited as the Producer Controlled Insurer Act.

(Source: P.A. 87-1090.)

(215 ILCS 107/5)
Sec. 5.
Definitions.
As used in this Act, the terms defined in the
Sections that follow this Section and precede Section 6 have the meanings
set forth in those Sections.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.05)
Sec. 5.05.
Accredited state.
"Accredited state" means a state in
which the insurance regulatory agency has qualified as meeting the minimum
financial regulatory standards promulgated and established from time to
time by the National Association of Insurance Commissioners.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.10)
Sec. 5.10.
Captive Insurer.
"Captive insurer" is
defined as in Section 123C-1 of the Illinois Insurance Code.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.15)
Sec. 5.15.
Control or controlled.
"Control" or "controlled" has the
meaning ascribed thereto in Article VIII 1/2 of the Illinois Insurance Code.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.20)
Sec. 5.20.
Controlled insurer.
"Controlled insurer" means a licensed
insurer that is controlled directly or indirectly by a producer.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.25)
Sec. 5.25.
Controlling producer.
"Controlling producer" means a
producer that directly or indirectly controls an insurer.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.30)
Sec. 5.30.
Licensed insurer or insurer.
"Licensed insurer" or "insurer"
means any person, firm, association, or corporation duly licensed to transact a
property or casualty insurance business in this State except that, for the
purposes of this Act, the following entities are not licensed insurers:
(Source: P.A. 87-1090.)

(215 ILCS 107/5.35)
Sec. 5.35.
Producer.
"Producer" means any person, firm, association,
or corporation that for compensation, commission, or other thing of value
acts or aids in any manner in soliciting, negotiating, or procuring the
making of any insurance contract on behalf of another.

(Source: P.A. 87-1090.)

(215 ILCS 107/5.40)
Sec. 5.40.
Director.
"Director" means the Director
of the Department of Insurance.

(Source: P.A. 87-1090.)

(215 ILCS 107/10)
Sec. 10. Applicability. This Act applies to licensed insurers
domiciled in this State or domiciled in a state that is not an accredited
state having in effect a substantially similar law. All provisions of
Article VIII 1/2 of the Illinois Insurance Code, to the extent not superseded
by this Act, shall apply to all parties within holding company systems
subject to this Act.

(Source: P.A. 96-1000, eff. 7-2-10.)

(215 ILCS 107/15)
Sec. 15.
Minimum standards.
(a) Controlled insurers and controlling producers must comply with the
provisions of this Section no later than 60 days after the effective date
of this Act.
(b) Except as provided in subsection (c), this Section shall apply if,
in any calendar year, the aggregate of gross written premium on business
placed with a controlled insurer by a controlling producer is equal to or
greater than 5% of the admitted assets of the controlled insurer as
reported in the controlled insurer's annual statement filed as of December
31 of the prior year.
(c) Notwithstanding the provisions of subsection (b), this Section shall
not apply if the following circumstances exist:
(d) A controlled insurer shall not accept business from a controlling
producer and a controlling producer shall not place business with a
controlled insurer unless: (i) there is a written contract between the
controlling producer and the insurer specifying the responsibilities
of each party, (ii) the contract has been approved by the board of directors of
the insurer, and (iii) the contract contains, at a minimum, all of the
following provisions:
(e) Every controlled insurer shall have an audit committee of the board
of directors composed of independent directors. The audit committee shall
meet annually with management, the insurer's independent certified public
accountants, and an independent casualty actuary or other independent loss
reserve specialist acceptable to the Director to review the adequacy of the
insurer's loss reserves.
(f) In addition to any other required loss reserve certification, on
April 1 of each year the controlled insurer shall file with the Director an
opinion of an independent casualty actuary or another independent loss
reserve specialist acceptable to the Director reporting loss ratios for
each line of business written and attesting to the adequacy of loss
reserves established for losses incurred and outstanding as of the end of
the previous year including, but not limited to, losses incurred but not
reported on business placed by the controlling producer. On April 1 of
each year the insurer shall report to the Director (i) the amount of
commissions paid to the controlling producer and the percentage of the net
premiums written that amount represents and (ii) the amount of commissions paid
to noncontrolling producers for placements of the same kinds of insurance
and the percentage of the net premiums written that amount represents.

(Source: P.A. 87-1090.)

(215 ILCS 107/20)
Sec. 20.
Disclosure.
The producer shall deliver written notice to
the prospective insured before the effective date of any policy disclosing
the relationship between the producer and the controlled insurer; except
that if the business is placed through a subproducer who is not a
controlling producer, the controlling producer shall retain in his records
a signed commitment from the subproducer that the subproducer is aware of the
relationship between the controlling producer and the insurer and that the
subproducer has or will notify the insured. The requirements of this Section
apply to all policies written or renewed more than 59 days after the effective
date of this Act.

(Source: P.A. 87-1090.)

(215 ILCS 107/25)
Sec. 25.
Penalties.
(a) If the Director believes that the controlling producer or any other
person has not materially complied with this Act or any regulation or order
promulgated hereunder, after notice and opportunity to be heard, the Director
may order the controlling producer to cease placing business with the
controlled insurer. If it is found that the controlled insurer or any
policyholder thereof has suffered any loss or damage because of the material
noncompliance, the Director may maintain a civil action or intervene in an
action brought by or on behalf of the insurer or policyholder for recovery of
compensatory damages or other appropriate relief. This subsection (a) shall
not be construed to prevent any other person from taking civil action against a
controlling producer.
(b) If an order for liquidation or rehabilitation of the controlled
insurer has been entered under Article XIII of the Illinois Insurance Code
and the receiver appointed under that order believes that the controlling
producer or any other person has not materially complied with this Act or
any regulation or order promulgated hereunder and the insurer suffered any
loss or damage as a result, the receiver may maintain a civil action for
recovery of damages or other appropriate sanctions for the benefit of the
insurer.
(c) Nothing in this Section shall affect the right of the Director to
impose any other penalties authorized under the Illinois Insurance Code.
(d) Nothing in this Section is intended to, or shall in any manner,
alter or affect the rights of policyholder, claimants, creditors, or other
third parties.

(Source: P.A. 87-1090; 88-364.)

(215 ILCS 107/30)
Sec. 30.
Administration of Act.
The Department of Insurance shall
administer this Act and may promulgate reasonable and necessary rules for that
purpose.

(Source: P.A. 87-1090.)

(215 ILCS 107/99)
Sec. 99.
This Act takes effect upon becoming law.

(Source: P.A. 87-1090.)