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2005 Illinois 215 ILCS 5/      Illinois Insurance Code. Article V 1/2 - Insurance Exchange


      (215 ILCS 5/Art. V.5 heading)
ARTICLE V 1/2. INSURANCE EXCHANGE

    (215 ILCS 5/107.01) (from Ch. 73, par. 719.01)
    Sec. 107.01. Scope. This Article shall apply to all persons transacting insurance business under this Article.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.02) (from Ch. 73, par. 719.02)
    Sec. 107.02. Incorporation.
    (a) There is hereby authorized an exchange for the reinsurance and insurance of risks. An exchange formed pursuant to this Article shall be a privately owned organization separate and distinct from the State. Within 60 days after this Act becomes law, the Director of Insurance shall appoint an interim Board of Directors to adopt temporary by‑laws, hire employees, and take such other steps as are authorized or necessary to establish the Exchange. When subscriptions totalling $4,000,000 have been received pursuant to Section 107.07, the Board of Directors shall apply to the Director for a Certificate of Authority. The Director shall approve such Certificate within 30 days unless he determines that the requirements of this Article have not been met and specifies his objections in writing. Within 30 days after receiving proof from the Exchange that the objections have been met, the Director shall approve the application of the Exchange.
    (b) After the effective date of this amendatory Act of 1997, the Director may organize, in accordance with subsection (a), an additional exchange for the reinsurance and insurance of risks. The additional exchange shall comply with the provisions of this Article.
(Source: P.A. 90‑499, eff. 8‑19‑97; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.03) (from Ch. 73, par. 719.03)
    Sec. 107.03. Kinds of Business. The syndicates of the Exchange may conduct the kind of insurance business listed in Class 2 and Class 3 of Section 4 of this Code when the Exchange is issued a Certificate of Authority.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.04) (from Ch. 73, par. 719.04)
    Sec. 107.04. Certificate of Authority. The Director shall issue a Certificate of Authority to the Exchange when:
    (a) Subscriptions of $4,000,000 have been received by the Exchange and,
    (b) The facilities required by Section 107.21 have been established.
(Source: P.A. 81‑1509.)

    (215 ILCS 5/107.05) (from Ch. 73, par. 719.05)
    Sec. 107.05. Transaction of business.
    (a) Reinsurance may be provided by and through syndicates.
    (b) Only Exchange brokers may present insurance business to the Exchange.
    (c) Syndicates may reinsure risks with syndicates or other persons subject to the rules of the Exchange.
    (d) The minimum premium for any insurance presented to the Exchange shall be $50,000. For group insurance, the minimum premium requirements must be met separately by each group member. However, if an Exchange broker by affidavit states that after diligent effort he was unable to procure the policies or contracts required to protect the property or risk described in the affidavit from companies authorized to transact business in this State, an insurance policy may be issued through the Exchange for any amount of premium. This subsection shall apply only to direct coverage of Illinois domiciled risks.
(Source: P.A. 89‑97, eff. 7‑7‑95; 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.06) (from Ch. 73, par. 719.06)
    Sec. 107.06. Authority for syndicates to do business. Subject to the last sentence of this Section, a syndicate may engage in the business of issuing or reinsuring insurance contracts through the Exchange for lines of insurance with respect to which the Exchange has received a Certificate of Authority. A syndicate shall engage in no other business. The Exchange or board may adopt by‑laws or rules or otherwise limit the kinds of business which may be transacted by a syndicate or syndicates.
(Source: P.A. 83‑1362.)

    (215 ILCS 5/107.06a) (from Ch. 73, par. 719.06a)
    Sec. 107.06a. Organization under Illinois Insurance Code.
    (a) After December 31, 1997, a syndicate or limited syndicate, except for a limited syndicate formed as a partnership or a special purpose limited syndicate, may only be organized pursuant to Sections 7, 8, 10, 11, 12, 14, 14.1 (other than subsection (d) thereof), 15 (other than subsection (d) thereof), 18, 19, 20, 21, 22, 23, 25, 27.1, 28, 28.1, 28.2, 29, 30, 31, 32, 32.1, 33, and 35.1 and Article X of this Code, to carry on the business of a syndicate, or limited syndicate under Article V‑1/2 of this Code; provided that such syndicate or limited syndicate is admitted to the Exchange.
    (b) After December 31, 1997, syndicates and limited syndicates are subject to the following:
        (1) Articles I, IIA, VIII, VIII 1/2, X, XI, XI 1/2,
    
XII, XII 1/2, XIII, XIII 1/2, XXIV, XXV (Sections 408 and 412 only), and XXVIII (except for Sections 445, 445.1, 445.2, 445.3, 445.4, and 445.5) of this Code;
        (2) Subsections (2) and (3) of Section 155.04 and
    
Sections 13, 132.1 through 140, 141a, 144, 155.01, 155.03, 378, 379.1, 393.1, 395, and 396 of this Code;
        (3) the Reinsurance Intermediary Act; and
        (4) the Producer Controlled Insurer Act.
    (c) No other provision of this Insurance Code shall be applicable to any such syndicate or limited syndicate except as provided in this Article V‑1/2.
(Source: P.A. 91‑278, eff. 7‑23‑99; 92‑74, eff. 7‑12‑01.)

    (215 ILCS 5/107.07) (from Ch. 73, par. 719.07)
    Sec. 107.07. Admission. Capitalization:
    Syndicate ‑ at least $2,000,000.
    Subscriber ‑ at least $30,000.
    Special Purpose Limited Syndicate ‑ at least $5,000.
    Fees: (a) Exchange brokers. An annual fee shall be paid to the Exchange by any person who presents risks to the Exchange. The annual fee established by the Exchange shall not exceed $5,000.
    (b) The Exchange may establish annual fees for the admission of syndicates, limited syndicates, and subscribers.
    Standards: The Exchange may establish additional standards for the admission of subscribers and Exchange brokers.
    Assessments: The Exchange may make assessments of subscribers or syndicates for the expenses of operating the Exchange.
(Source: P.A. 92‑74, eff. 7‑12‑01.)

    (215 ILCS 5/107.08) (from Ch. 73, par. 719.08)
    Sec. 107.08. Rehabilitation, conservation or liquidation. If the Board or Director of Insurance determines after an examination, audit or pursuant to an Exchange internal hearing, that a syndicate has become insolvent or financially impaired to the extent that its further transaction of business is hazardous to its policyholders, its creditors, or the public, it shall order the syndicate to cease and desist from assuming insurance or reinsurance obligations on the Exchange or take such other action for the protection of policyholders and creditors as provided in this Article.
    Upon issuing a cease and desist order as provided in this Section, the Board shall notify the Director of Insurance of such action. If the Director determines the syndicate to be insolvent or financially impaired, the Director shall report that determination to the Attorney General. The Attorney General shall apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the Circuit Court of Cook County, Illinois, for an order to rehabilitate, conserve, or liquidate the defendant syndicate as provided in Article XIII of this Code and for such other relief as the nature of the case and the interests of the policyholders, creditors, or the public may require.
    The Court, upon entering an Order of Rehabilitation, Conservation, or Liquidation, shall appoint the Director of Insurance as Rehabilitator, Conservator, or Liquidator, and the rehabilitation, conservation, or liquidation shall be conducted pursuant to Article XIII of this Code.
(Source: P.A. 89‑206, eff. 7‑21‑95.)

    (215 ILCS 5/107.09) (from Ch. 73, par. 719.09)
    Sec. 107.09. All written policy applications and written policies shall prominently state that the policy is being submitted or issued through the Exchange; that coverage thereunder is provided solely by the underwriting syndicate or syndicates; that the Exchange is not an insurer; and that the Exchange is not a party to the contract and has no liability thereunder.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.10) (from Ch. 73, par. 719.10)
    Sec. 107.10. Limitation of risk.
    (a) The net maximum amount of insurance assumed by a syndicate upon any single risk shall not constitute more than 10% of the capitalization of a syndicate.
    (b) The net maximum amount of insurance assumed by a subscriber upon any single risk shall not constitute more than 10% of the capitalization of a subscriber.
    (c) The Board may establish rules governing the maximum amount of insurance assumed by a syndicate or subscriber or limited syndicate.
    (d) The Board may establish rules limiting broker participation in a syndicate.
(Source: P.A. 89‑206, eff. 7‑21‑95.)

    (215 ILCS 5/107.11) (from Ch. 73, par. 719.11)
    Sec. 107.11. Illinois Insurance Code. No provision in any part of the Illinois Insurance Code other than this Article shall be applicable to this Article unless such provision is expressly made applicable to this Article.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.12) (from Ch. 73, par. 719.12)
    Sec. 107.12. The Director of Insurance may examine the financial records of the Exchange, syndicates, limited syndicates, subscribers and Exchange brokers.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.13) (from Ch. 73, par. 719.13)
    Sec. 107.13. Annual statement. The Department shall require an annual statement from the Exchange, which shall be an aggregate of all syndicate's and limited syndicate's financial records for the year ending December 31 immediately preceding. The statement shall be filed with the Department by June 1 of each year.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.13a) (from Ch. 73, par. 719.13a)
    Sec. 107.13a. Periodic filings of syndicates.
    (a) Every syndicate doing business on the Exchange shall file with the Board and with the Director of Insurance by March 1st in each year a financial statement for the year ending December 31st immediately preceding on forms prescribed by the Director, which shall conform substantially to the form of statement adopted by the National Association of Insurance Commissioners and in use on the date the statement is filed. In the preparation of such annual statement, each syndicate shall compute the combined amount earned during the year from investment income and from underwriting income on the basis of the accounting method incorporated in the underwriting and investment exhibit of such annual statement. Such statement shall be verified by oaths of the president and secretary of the syndicate, or, in their absence, by 2 other principal officers.
    (b) Within 45 days after the end of each quarter, each syndicate shall file with the Director and with the Board quarterly financial statements that conform substantially to the quarterly statement form adopted by the N.A.I.C.
    (c) By March 1 of each year, each syndicate shall file with the Director and the Board a certification of loss reserves signed by a fellow or associate of the Casualty Actuary Society, to be followed on or before June 1 of that year by a detailed report prepared by such actuary.
    (d) By June 1 of each year, each syndicate shall file with the Director and with the Board an annual audited financial report certified by an independent certified public accountant.
    (e) Each syndicate doing business on the Exchange shall file with the Director and the Board by May 1 of each year an annual Form B Registration Statement in accordance with Sections 131.14 and 131.15 of this Code.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.14) (from Ch. 73, par. 719.14)
    Sec. 107.14. (Repealed).
(Source: P.A. 88‑364. Repealed by P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.15) (from Ch. 73, par. 719.15)
    Sec. 107.15. Definitions. Persons: A person is an individual, partnership, association, corporation or limited partnership.
    Syndicate: A syndicate is a subscriber, group of subscribers, limited syndicate or group of limited syndicates which meets the minimum capital requirement of Section 107.07.
    Limited Syndicate: A limited syndicate is a corporation or partnership formed by subscribers for the purpose of joining with syndicates, other subscribers, or limited syndicates to form syndicates or to participate with syndicates in the insurance or reinsurance of risks.
    Subscriber: A subscriber is a person who has made a deposit of money pursuant to Section 107.07 permitting that person to participate as a subscriber in a syndicate or limited syndicate.
    Special Purpose Limited Syndicate: A special purpose limited syndicate is any entity formed for the purposes of participation in the securitization of reinsurance risks in accordance with rules adopted pursuant to Section 107.15b.
    Exchange Broker: A person licensed as an insurance broker in the State of Illinois or as a reinsurance intermediary who is admitted to the Exchange to present applications for insurance.
    Present Applications for Insurance: Means to make an application to a syndicate for an insurance policy.
    Reinsurance: Means reinsuring insurance.
    Minimum Subscription: The subscription capital required for admission as a subscriber to the Exchange. Subscribers shall at all times maintain the minimum capitalization required by this Article.
(Source: P.A. 92‑74, eff. 7‑12‑01.)

    (215 ILCS 5/107.15a) (from Ch. 73, par. 719.15a)
    Sec. 107.15a. Duties and powers of trustees. The Board of Trustees shall have such power as may be necessary for the management and operations of the Exchange and the Association. Such powers shall include but not be limited to:
        (a) establishment of the qualifications,
    
requirements, limitations and obligations for syndicates, limited syndicates, subscribers, and Exchange brokers;
        (b) denying access to the Exchange to applicants
    
which do not meet such qualifications, requirements, and obligations;
        (c) imposing penalties on syndicates, limited
    
syndicates, subscribers and Exchange brokers for violations of the regulations of the Exchange or orders of the Board;
        (d) assessing fees annually on syndicates, limited
    
syndicates, subscribers and Exchange brokers, and making assessments on syndicates, limited syndicates and subscribers for the expenses of the Exchange;
        (e) suspending, in whole or in part, access to the
    
Exchange or expelling syndicates, limited syndicates, subscribers or Exchange brokers who do not continue to meet the qualifications, requirements, and obligations established by the Board, who fail or refuse to pay penalties, fees, or assessments when due, or whose continued operation the Board determines would be injurious to the best interests of the Exchange, policyholders, claimants, or creditors;
        (f) obtaining immediate access for the benefit of
    
the Immediate Access Security Association to the following assets of the impaired or insolvent syndicate:
            (i) the full amount held in its security trust
        
or custodial account; and
            (ii) the assets of its subscribers under their
        
certificates of guaranty;
        (g) organizing a guaranty mechanism or fund for the
    
protection of policyholders.
(Source: P.A. 91‑77, eff. 7‑9‑99; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.15b)
    Sec. 107.15b. Board rulemaking authority.
    (a) The Board has the authority to adopt such rules as it deems necessary to carry out its duties under this Article and to maintain a well‑regulated marketplace. A syndicate, limited syndicate, subscriber, or exchange broker, as a condition of its authority to transact business through the Exchange, shall comply with this Article, all existing rules of the Exchange, and all rules or modifications of existing rules adopted by the Board and not disapproved by the Director, including, but not limited to, rules extending requirements and obligations with effect after the suspension, expulsion, or voluntary withdrawal of the syndicate, limited syndicate, subscriber, or exchange broker from access to the Exchange.
    (b) A rule or modification to an existing rule adopted by the Board after the effective date of this amendatory Act of 1997 shall be filed with the Director not less than 30 days before the proposed effective date of the rule or modification. The Director, upon written order, may disapprove the rule or modification, in whole or in part, upon a finding that the rule or modification would cause the exchange to be operated in a manner that would be hazardous to the public or its policyholders.
    (c) An order by the Director disapproving a rule or modification shall be deemed to be a final administrative decision and shall be subject to judicial review pursuant to the provisions of the Administrative Review Law.
    (d) Neither the Board nor the Exchange is an agency of the State for purposes of the Illinois Administrative Procedure Act or otherwise.
(Source: P.A. 90‑499, eff. 1‑1‑98; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.16) (from Ch. 73, par. 719.16)
    Sec. 107.16. Share Votes. The minimum subscription shall constitute a "share". Each subscriber shall have "share votes" equal to its total subscription divided by the minimum subscription. No fractional share votes may be voted. In determining a subscriber's subscription, only subscriptions which have been deposited with the Exchange for at least 3 months or more shall be counted. The amount of share votes eligible to vote shall be determined 30 days before each meeting.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.17) (from Ch. 73, par. 719.17)
    Sec. 107.17. Governance. The business and affairs of the Exchange shall be managed by an Executive Committee with the advice and consent of the Board of Trustees.
    There shall be 2 classes of trustees: Subscriber trustees and public trustees. Both public trustees and subscriber trustees shall be elected by a majority vote of the subscribers. In addition, the public trustees shall be approved by the Director.
    The trustees shall be 13 in number. There shall be at least 5 public trustees who shall be individual persons who are not insurers, subscribers, exchange brokers, or employees of insurers, subscribers, exchange brokers, syndicates, or affiliates thereof.
    The Executive Committee shall be composed of 3 public trustees elected by the Board. Members of the Executive Committee shall serve for a term of 3 years, except that of the initial members of the Executive Committee, one member shall serve for a term of one year, one member shall serve for a term of 2 years, and one member shall serve for a term of 3 years. The terms of the initial members of the Executive Committee shall be determined by lot.
    All decisions of the Executive Committee, except those of a ministerial nature that may be delegated by the Board, shall be subject to the approval of the Board. All action of the Executive Committee shall be approved unless disapproved on a recorded vote by 9 members of the Board.
(Source: P.A. 90‑499, eff. 1‑1‑98; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.18) (from Ch. 73, par. 719.18)
    Sec. 107.18. Voting for trustees. Each subscriber shall have the number of votes equal to its total subscription divided by the minimum subscription. Trustees shall be elected by a majority of the votes cast for that trustee position.
(Source: P.A. 89‑206, eff. 7‑21‑95.)

    (215 ILCS 5/107.19) (from Ch. 73, par. 719.19)
    Sec. 107.19. By‑laws. The subscribers shall adopt such by‑laws as proposed by the Board or subscribers constituting 5% or more of the subscriber share votes. By‑laws shall be adopted by a majority of the share votes of subscribers.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.20) (from Ch. 73, par. 719.20)
    Sec. 107.20. Records. The records of the Exchange, syndicates, Exchange brokers, and limited syndicates transacting business under this Article shall be maintained in Illinois and available for examination by the Department. The Exchange shall have the right to audit records of a syndicate, limited syndicate or Exchange broker at any time.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.21) (from Ch. 73, par. 719.21)
    Sec. 107.21. Central Processing Facility. Establishment: The Exchange shall establish a facility for centralized record keeping, data collection, and statistical compilation of all insurance and reinsurance transactions involving a subscriber.
    Scope: Except with respect to reinsurance contracts where the risks are transferred from a syndicate to a limited syndicate and security for the exposure is held in a fully funded trust account, all monies due on contracts of insurance and reinsurance issued by syndicates shall be payable to the Exchange and disbursed directly to the Facility for recording and distribution. All other transactions of business on the Exchange shall be reported concurrently to the Facility unless exempted by the Board.
    Management: The management and operation of the Facility shall be conducted pursuant to rules adopted by the Board. The facility shall keep full and accurate accounts and records of receipts and disbursements of the funds being processed by the Facility and maintain accounting records of all transactions of each subscriber, syndicate, and limited syndicate. Monthly reports stating the receipts and disbursements of the Facility shall be made to the Board. The Board may also require any other report that it deems necessary.
(Source: P.A. 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.22) (from Ch. 73, par. 719.22)
    Sec. 107.22. Deposit of Funds. The Exchange may establish rules for the deposit of premiums or subscriptions. Such rules may include limiting the investment of funds or requiring minimum deposits.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.23) (from Ch. 73, par. 719.23)
    Sec. 107.23. Interim Board. The interim Board shall call for the election of the Board of Trustees no later than 9 months after the Exchange has received a Certificate of Authority. The by‑laws shall specify the terms of the Board of Trustees. The term shall not be greater than 3 years.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.24) (from Ch. 73, par. 719.24)
    Sec. 107.24. Indemnification. The Board may adopt by‑laws providing for the indemnification of Trustees and employees.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.25) (from Ch. 73, par. 719.25)
    Sec. 107.25. Service of Process. The Exchange, and each syndicate, limited syndicate, subscriber, or Exchange broker as a prerequisite of admission shall designate the Director of Insurance of the State of Illinois 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 the operation of the Exchange or policies of insurance and reinsurance issued through the Exchange.
(Source: P.A. 81‑1047.)

    (215 ILCS 5/107.26) (from Ch. 73, par. 719.26)
    Sec. 107.26. Immediate Access Security Association.
    (a) There is authorized a non‑profit corporation which shall be known as the Immediate Access Security Association, which shall be established as a privately owned organization incorporated under the General Not for Profit Corporation Act separate and distinct from the State and not a part of the State government. All syndicates shall be members of the Association as a condition of their authority to transact business on the Exchange. The Association shall be exempt from payment of all fees and all taxes levied by this State or any of its subdivisions.
    (b) In the event of the entry of an Order of Rehabilitation, Conservation, or Liquidation against a syndicate pursuant to Section 107.08, the Association shall establish a claims date, which shall be not later than one year after the date of such Order, by which time all persons having claims arising out of insurance obligations of the syndicate must file their claim with the Association. The Association shall give notice to all policyholders and other persons who may have a claim against the syndicate as shown by the syndicate's records. Such notice shall include the date of the Order, the claims date established by the Association and the procedure and form for filing a claim with the Association. The Association shall determine the syndicate's insurance obligations based on all claims filed on or before the claims date. The Association shall then pay all claims for which an insurance obligation exists from the assets of the syndicate's trust or custodial account and certificates of guaranty. In the event those assets are insufficient to pay all claims in full, the Association shall make payment pursuant to a plan approved by the court entering the Order of Rehabilitation, Conservation, or Liquidation. The Rehabilitator, Conservator, or Liquidator shall be bound by any settlement made by the Association. Any person not receiving full reimbursement for his claim from the Association shall have a claim against the assets being administered by the Rehabilitator, Conservator, or Liquidator for the remaining amounts. In settling claims and subject to limitations in this Section, the Association shall have the same rights and duties of the insolvent syndicate as if the syndicate had not become insolvent.
    (c) The Association may delegate to such other person or entity as it deems appropriate the performance of any duty imposed on it by this Section.
(Source: P.A. 90‑794, eff. 8‑14‑98; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.27) (from Ch. 73, par. 719.27)
    Sec. 107.27. Syndicate trust account; certificates of guaranty.
    (a) In addition to any other requirements imposed by this Article the Board may require each syndicate to maintain a trust or custodial account in such amounts as the Board may determine by rule; provided that, except by special order of the Board, no syndicate may be required to maintain in the trust or custodial account an amount in excess of 50% of the amount of its surplus as regards policyholders as shown by its most recent audited report. Any trust or custodial account so established shall be for the benefit of all policyholders and claimants of the syndicate for losses arising out of and within the coverage of insurance risks or obligations underwritten by the syndicate. Upon entry of an Order of Liquidation against a syndicate all amounts in the trust or custodial account shall be immediately transferred to the Association created under Section 107.26 to be used to investigate, negotiate, and satisfy the syndicate's outstanding insurance obligations. Expenses of the Association or the Liquidator in performing these functions may be paid from the insolvent syndicate's trust or custodial account upon application to and approval by the Liquidation Court. The Board shall provide by rule for the establishment and maintenance of such trust or custodial accounts including the investment of funds held in such accounts. Any amounts deposited into a trust or custodial account required to be maintained by this Section shall be an asset of the syndicate.
    (b) The Board shall determine limitations on the amount of insurance or reinsurance written or assumed by a syndicate under subsection (c) of Section 107.10. In addition to the capitalization requirement under Section 107.07 a syndicate may proportionately increase its ratio of net premiums to capitalization, pursuant to rules adopted by the Board, by providing security in the form of certificates of guaranty or in the form of direct obligations of a member bank of the Federal Reserve System. Any such certificate of guaranty or bank obligation shall be for the benefit of all policyholders and claimants of the syndicate for losses arising out of and within the coverage of insurance risks or obligations underwritten by the syndicate. Upon entry of an Order of Liquidation against a syndicate, amounts payable under certificates of guaranty or bank obligations shall immediately be paid to the Association created under Section 107.26 to be used to satisfy the syndicate's outstanding insurance obligations. The Board by rule shall establish the form and amounts of such certificates or obligations and standards for determining the security necessary to ensure performance under them. The Board may provide for different limitations by line or in the aggregate based on the existence or non‑existence of certificates of guaranty or bank obligations and the type of security backing such certificates or obligations.
(Source: P.A. 89‑97, eff. 7‑7‑95; 89‑206, eff. 7‑21‑95; 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.28)
    Sec. 107.28. Syndicate reorganization.
    (a) A syndicate may seek the approval of the Director for reorganization as provided in this Section.
    (b) The Director shall approve the reorganization, merger, or consolidation so long as:
        (1) the resulting company is authorized to transact
    
the kind or kinds of business the syndicate was authorized to transact as of the effective date of this amendatory Act of 1997;
        (2) all applicable provisions of this Code are
    
satisfied, except that for purposes of complying with Article VIII the Director may grant an extension of time, not to exceed one 6‑month period, within which the reorganized, merged, or consolidated company shall divest itself of any nonadmitted assets held by the syndicate on or before the effective date of this amendatory Act of 1997; and
        (3) the books and records of the syndicate
    
accurately reflect its financial condition and affairs as of the date of its most recently filed financial statement, and no material change in its financial condition or affairs has subsequently occurred.
(Source: P.A. 90‑499, eff. 8‑19‑97.)

    (215 ILCS 5/107.29)
    Sec. 107.29. Exchange operations runoff.
    (a) The Board may adopt a plan of operation for the orderly runoff of the operations of the exchange. The plan of operation shall provide that all funds, legal rights, title to property, and causes of action of the Exchange including, but not limited to, all assessments, subscription payments, proceeds, investments, premium fees, surcharge receipts, and funds maintained under Sections 107.26 and 107.27 and the rules or regulations of the Exchange implementing those Sections or any other provision of this Article, shall be accounted for and paid over to the Director as receiver of any delinquent syndicate in receivership after settlement of all claims against the exchange.
        (1) In the event that 2 or more syndicates are then
    
in receivership, the amount paid over to each estate shall be proportional to the relative size of the surplus deficiency of each.
        (2) Any excess remaining after the payment of any
    
and all claims against such receivership estates shall be transferred, in equal shares, to the domestic companies which result from the reorganization, merger, or consolidation of former syndicates of the Exchange.
    (b) For purposes of this Section, "syndicate" means a syndicate or a limited syndicate.
(Source: P.A. 90‑499, eff. 8‑19‑97; 91‑77, eff. 7‑9‑99; 91‑796, eff. 6‑9‑00.)

    (215 ILCS 5/107.30)
    Sec. 107.30. Letters of credit. If approved by the Board of Trustees, a syndicate may utilize letters of credit that meet the requirements of Section 173.1(2)(c) and Section 173.1(3)(A) of this Code.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

    (215 ILCS 5/107.31)
    Sec. 107.31. Information required from applicants.
    (a) A person desiring to form an insurance company for the purpose of doing business as a syndicate shall apply to the Exchange and provide such information the Exchanges deems necessary. The information shall be submitted on forms provided by the Exchange. The information required may include, but is not limited to, the information specified in Sections 131.5 and 155.04 of this Code.
    (b) If, after a review of the application and other relevant information, the Exchange finds the applicant to be a fit and proper person to form a syndicate, the Exchange shall notify the Director of that finding in writing.
(Source: P.A. 90‑499, eff. 1‑1‑98.)

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