Illinois Compiled Statutes
Chapter 215 - INSURANCE
215 ILCS 120/ - Farm Mutual Insurance Company Act of 1986.

(215 ILCS 120/1) (from Ch. 73, par. 1251)
Sec. 1.
Scope.
This Act shall apply to:
(1) companies organized or operating prior to the effective date of this
Act, under an Act entitled, "An Act relating to local mutual district,
county and township insurance companies", approved March 13, 1936, as
amended, and
(2) any fire insurance company, corporation or association operating in
this State under a special charter and heretofore subject to "An Act
relating to local mutual district, county and township insurance
companies", approved March 13, 1936, as amended.

(Source: P.A. 84-1431.)

(215 ILCS 120/2) (from Ch. 73, par. 1252)
Sec. 2.
Farm Mutual Insurance Companies.
Any district, county, township
or special act mutual insurance company now authorized to write insurance
in this State shall hereafter be known as a "Farm Mutual Insurance Company".

(Source: P.A. 84-1431.)

(215 ILCS 120/3) (from Ch. 73, par. 1253)
Sec. 3.
Definitions.
For purposes of this Act unless the context
clearly requires otherwise:
"Policyholders' Surplus" means a company's admitted assets
less its
liabilities, including its liability for an unearned premium reserve.
"Direct Premium Written" means those amounts charged
policyholders
pursuant to the company's rating schedules and plans currently in use, less
return premiums.
"Gross Premium Written" means direct premium written plus assumed reinsurance premium.
"Assessment" means amounts levied to policyholders by
action of the
board of directors pursuant to the contingent liability clause contained in the
bylaws.
"Net Premium Written" means direct premium written plus
assumed reinsurance premium less ceded reinsurance
premium.

(Source: P.A. 88-364.)

(215 ILCS 120/4) (from Ch. 73, par. 1254)
Sec. 4.
Definition of Admitted Assets.
Admitted assets shall include
those investments permitted under Section 12 of this Act and in addition
thereto, only the following:
(1) Cash funds held in the company's office and under the company's control.
(2) Interest due and accrued on bonds, certificates of deposit and other
investments permitted by this Act that are not in default.
(3) Dividends declared and unpaid on mutual funds, common stock, and
preferred stock, permitted by this Act.
(4) Amounts recoverable from solvent insurance companies
licensed to do
business in this State.
(5) Tax refunds due from the United States or the State of
Illinois.
(6) Premiums receivable on policies not over 90 days past due.
The due date of the premium shall be considered to be the first day
of the coverage period for which the premium is payable.

(Source: P.A. 90-794, eff. 1-1-99.)

(215 ILCS 120/5) (from Ch. 73, par. 1255)
Sec. 5.
Kinds of Insurance.
(1) Any company operating under this Act
is authorized to insure or to accept reinsurance from other farm mutual
companies against loss or damage by:
(2) A company authorized under this Act may insure against loss or
damage by the perils of wind, only if such company has and maintains
policyholders' surplus equal to or greater than $100,000.
(3) A company may undertake to insure against the peril of flood to the
extent such company is reinsured pursuant to the National Flood Insurance
Program, and only if such company has and maintains policyholders' surplus
equal to or greater than $100,000.

(Source: P.A. 88-364.)

(215 ILCS 120/6) (from Ch. 73, par. 1256)
Sec. 6.
Territories.
The territories of a farm mutual insurance
company are limited to its domiciliary county and counties contiguous
thereto. However, territories may be expanded by amendment to its
articles of incorporation in accordance with Section 7 of this Act.
Territorial limitations shall not apply to reinsurance assumed from other
farm mutual companies operating under this Act.
Any farm mutual insurance company which does not wish to avail itself of
additional territory authorized by Sections 6 or 7 of this Act or kinds of
insurance authorized by Section 5 of this Act may retain the territorial
authority contained in its articles of incorporation that were in effect on
the effective date of this Act.

(Source: P.A. 84-1431.)

(215 ILCS 120/7) (from Ch. 73, par. 1257)
Sec. 7.
Additional Territory.
Any farm mutual insurance company may
amend its articles of incorporation to include other adjoining counties,
provided that the company's net written premium did not exceed 3 times its
policyholders' surplus as reported in its last financial statement.
Subject to the approval of the Director of Insurance, any company having
$150,000 policyholders' surplus may add one contiguous county to its
territory, and may add one additional contiguous county for each additional
$50,000 policyholders' surplus thereafter.

(Source: P.A. 84-1431.)

(215 ILCS 120/8) (from Ch. 73, par. 1258)
Sec. 8.
Amendment of Articles of Incorporation.
(1) A farm mutual company may amend its articles of incorporation in any
respect not in
violation of this Act.
(2) Amendments to the articles shall be made in the following manner:
The board of directors shall adopt a resolution to amend the
articles of incorporation and sign a Statement of Directors setting forth
such resolution and deliver the Statement of Directors in duplicate to the
Director of Insurance together with duplicate copies of the restated
articles of incorporation to be approved or disapproved by the Director.
If approved, the Director shall place on file in his office all of the
documents so delivered to him except one of the duplicate originals of the
amended articles of incorporation which shall be delivered to the farm
mutual insurance company. The farm mutual insurance company shall file the
duplicate original copy of the amended articles of incorporation for
record, within 15 days after it has been delivered to the farm mutual
insurance company, in the office of the Recorder of the domiciliary county.
(3) Amended articles must set forth:
(4) Each farm mutual insurance company shall hold an annual meeting of
its members on the date and time and at the place specified in its articles
of incorporation; immediately thereafter, a separate meeting of the board
of directors shall be held for the purpose of electing officers. The
annual meeting shall be held on or before the first day of May and shall be
held in the domiciliary county where the home office of the company is
located. At such meeting the Treasurer shall present an annual statement
showing the condition of the company on December 31 of the preceding
year.
Notice of the annual meeting of the members shall be stamped or printed
in or on the policy.
(5) The number of directors shall not be less than 7, nor more than 15
members, a majority of whom shall constitute a quorum to do business, to be
elected by ballot of the members and who shall be elected in the manner and
for the length of time prescribed in the articles of incorporation.
Directors may be elected for a period of no more than 3 years. No more
than one-half of the directors shall be elected in any one year. Said
election shall be held at the annual meeting of the company. Every person
insured shall be entitled to one vote and may cast the same in person or by
proxy. Vacancies on the board shall be filled by the remaining directors
until the next annual meeting.
The directors shall elect from their number a president and at their
option a vice president, and such additional officers as they may deem
necessary, and shall also elect a treasurer, and a secretary, who may or
may not be a member of the company. The offices of secretary and treasurer
may be occupied by one person. All of such officers shall hold their office
for one year, and until their successors are elected and qualified.
(6) The company shall prepare and maintain a surety bond on any person
handling
company funds and on any officer, director, or employee for the faithful
performance
of his duties, in such amounts pursuant to the regulations
promulgated
by the Director.

(Source: P.A. 88-364.)

(215 ILCS 120/9) (from Ch. 73, par. 1259)
Sec. 9.

Qualification of Membership - Of Directors - Representatives
- Personal Liability. Only policyholders residing in the territory in
which the farm mutual insurance company is authorized to write insurance
shall become a director of such company.
Any person, public or private corporation, board, estate or association
owning property within the territory of such company may make applications,
enter into agreements for and hold policies in any such company. Any
officer, trustee, board member or legal representative of any such
corporation, board, estate or association may be recognized as acting for or
on its behalf for the purpose of such membership, but shall not be
personally liable upon such contract of insurance by reason of acting in
such representative capacity.

(Source: P.A. 84-1431.)

(215 ILCS 120/10) (from Ch. 73, par. 1260)
Sec. 10.
Property insurable; limitations of risk.
(1) Farm mutual
insurance companies are permitted to insure the following classes of property:
No farm mutual insurance company may insure any property within the
limits of any city containing over 50,000 inhabitants at the time of the
organization of the company.
(2) No farm mutual insurance company authorized to write the kinds of
insurance enumerated in Section 5 of this Act may expose itself to any loss
on any one risk in an amount in excess of $20,000 plus 10% of its
policyholders' surplus in excess of $20,000.
A farm mutual insurance company insuring against the perils of wind or
hail must have and maintain catastrophic reinsurance which limits the
company's exposure on any one loss occurrence to 20% of its policyholders'
surplus.
No portion of any such risk which has been reinsured with a farm mutual
insurance company or an insurance company authorized to write the kinds of
insurance described in Class 2 or
Class 3 of Section 4 of the Illinois Insurance Code shall be included in
determining the limitation of risk described herein.
For purposes of this Section:
A single risk shall be all real and personal property in one fixed
location and not separated by 50 feet.
As regards the peril of wind or hail, the term "loss occurrence" shall
mean all losses occasioned by tornadoes, cyclones, windstorms, hurricanes,
or hail stones arising from the same atmospheric disturbance and occurring
during any continuous period of not less than 48 hours.
(3) Whenever the company's financial condition is such that the further
assumption of risks might be hazardous to policyholders, the Director of
Insurance may order the company to take one or more of the following steps:
(4) Whenever the Director determines that a farm mutual insurance
company is insolvent he shall order the farm mutual insurance company to
levy a special assessment within 30 days of receipt of such order. If the
insolvency is not corrected within 90 days of the mailing of such
assessment, the company shall be subject to liquidation pursuant to Article
XIII of the Illinois Insurance Code.

(Source: P.A. 88-364.)

(215 ILCS 120/11) (from Ch. 73, par. 1261)
Sec. 11.
Premium and assessments.
The company shall collect from its
members such premiums, fees and assessments as the directors shall find
necessary or as prescribed in the bylaws. Every policy issued pursuant to
this Act shall contain a provision setting forth the contingent liability
of its members. Each member shall be liable in accordance with the terms of
his policy for his pro rata share of the amount necessary to pay all losses
and necessary expenses incurred during the time for which his respective
policy is written, and to maintain a policyholders' surplus. The company
may in its bylaws limit the liability of its members during each year to
an amount equal to not less than 3% of the insurance carried by the member.
It shall be the duty of the Secretary, whenever an assessment shall have
been made, to immediately notify every person composing such company,
personally, by an agent or by letter sent to his usual post office address,
of the purpose of such assessment and if for payment of a loss the amount
of such loss, and the sum due from him as his share thereof, and of the
time when and to whom such payment is to be made; but such time shall not
be less than 30 nor more than 90 days from the date of such notice.
Insurance policies issued pursuant to this Act shall provide that if a
policyholder fails to pay an assessment levied in accordance with this
paragraph within the prescribed time, the policy shall be suspended until
such assessment is paid.

(Source: P.A. 84-1431.)

(215 ILCS 120/12) (from Ch. 73, par. 1262)
Sec. 12. Investments. Without the prior approval of the Director, the
funds of any company operating under or
regulated by the provisions of this Act, shall be invested only in the
following:
An investment that qualified under this Section at the time it was
acquired by the company shall continue to qualify under this Section.
Investments permitted under this Section shall be registered in the name of
the
company and under its direct control or shall be held in a custodial account
with a bank or trust company that is qualified to administer trusts in Illinois
under
the Corporate Fiduciary Act and that has an office in Illinois.
However, securities may be held in street form and in the custody of a
licensed dealer for a period not to exceed 30 days.
Notwithstanding the provisions of this Act, the Director may, after notice
and hearing, order a company to limit or withdraw from certain investments or
discontinue certain investments or investment practices to the extent the
Director finds those investments or investment practices endanger the solvency
of the company.

(Source: P.A. 100-201, eff. 8-18-17.)

(215 ILCS 120/13) (from Ch. 73, par. 1263)
Sec. 13.
Annual statement - filing of - penalty for late filing.
Every
company authorized under this Act shall file with the Director by January
31 of each year a financial statement for the year ending December 31 of
the year preceding on forms prescribed by the Director. A company may request
the Director to grant an extension until February 15; however, such request
must be received by the Department of Insurance no later than January 25.
The Director shall not deny a request for an extension made by a company
whose gross premium written for the year just ending exceeds $750,000.
The Director may require that a company file quarterly financial
statements which shall be due 30 days after the end of each quarter.
A company failing to file its annual financial statements by January 31
or by February 15 (if the Director had previously granted such extension)
shall pay to the Director, a penalty of $20 per day for each day after the
due date that the statement was not received.

(Source: P.A. 84-1431.)

(215 ILCS 120/14) (from Ch. 73, par. 1264)
Sec. 14.
Membership requirement.
Any company which, on or after
December 31, 1988, fails to maintain a minimum of 100 members shall be
subject to liquidation pursuant to Article XIII of the Illinois Insurance Code.

(Source: P.A. 84-1431.)

(215 ILCS 120/15) (from Ch. 73, par. 1265)
Sec. 15.
Application of law.
Companies subject to this Act shall be
subject to the provisions of Article X (Merger) and Article XXV of the
Illinois Insurance
Code but shall not be subject to any other provisions of the Illinois
Insurance Code unless specifically enumerated therein.

(Source: P.A. 90-583, eff. 5-29-98.)

(215 ILCS 120/16) (from Ch. 73, par. 1266)
Sec. 16.
New companies prohibited.
No farm mutual insurance company
shall be incorporated after the effective date of this Act.

(Source: P.A. 84-1431.)

(215 ILCS 120/17) (from Ch. 73, par. 1267)
Sec. 17.

This Article shall be known and may be cited as the "Farm Mutual
Insurance Company Act of 1986".

(Source: P.A. 84-1431.)