Any risk retention group organized and licensed in a state other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows: A. Notice of operations and designation of the Director as agent.
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Terms Used In Illinois Compiled Statutes 215 ILCS 5/123B-4
Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
Hazardous financial condition: means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able: (a) to meet obligations to policyholders with respect
to known claims and reasonably anticipated claims; or
(b) to pay other obligations in the normal course of
Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
Insurance: means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of Illinois. See Illinois Compiled Statutes 215 ILCS 5/123B-2
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
Liability: means : (a) legal liability for damages (including costs of
defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:
(i) any business (whether for profit or not for
profit), trade, product, services (including professional services), premises, or operations; or
(ii) any activity of any state or local
government, or any agency or political subdivision thereof; but
(b) does not include personal risk liability and an
Risk retention group: means any corporation or other limited liability association: (a) whose primary activity consists of assuming and
spreading all, or any portion, of the liability exposure of its group members;
(b) which is organized for the primary purpose of
conducting the activity described under paragraph (a) of this subsection (11);
(c) which: (i) is organized and licensed as a liability
insurance company and authorized to engage in the business of insurance under the laws of any state; or
(ii) before January 1, 1985 was organized or
licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purposes of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986);
(d) which does not exclude any person from membership
in the group solely to provide for members of such a group a competitive advantage over such a person;
(e) which: (i) has as its owners (directly or indirectly)
only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or
(ii) has as its sole owner (directly or
indirectly) an organization which:
(I) has as its members only persons who
comprise the membership of the risk retention group; and
(II) has as its owners only persons who
comprise the membership of the risk retention group and who are provided insurance by such group;
(f) whose members are engaged in businesses or
activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;
(g) whose activities do not include the provision of
insurance other than:
(i) liability insurance for assuming and
spreading all or any portion of the liability of its group members; and
(ii) reinsurance with respect to the liability of
any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subsection (11) for membership in the risk retention group which provides such reinsurance; and
Before offering insurance in this State, a risk retention group shall submit to the Director on a form prescribed by the NAIC: (1) a statement identifying the state or states in
which the risk retention group is organized and licensed as a liability insurance company, its date of organization, its principal place of business, and such other information, including information on its membership, as the Director may require to verify that the risk retention group is qualified under subsection (11) of Section 123B-2 of this Article;
(2) a copy of its plan of operations or a feasibility
study and revisions of such plan or study submitted to its state of domicile; provided, however, that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which (a) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and (b) was offered before such date by any risk retention group which had been organized and operating for not less than 3 years before such date; and
(3) a statement of registration which designates the
Director as its agent for the purpose of receiving service of legal documents or process, together with a filing fee of $200 payable to the Director.
A risk retention group shall submit a copy of any material revision to its plan of operation or feasibility study required by subsection B of Section 123B-3 of this Code within 30 days after the date of the approval of the revision by the Director or, if no such approval is required, within 30 days after filing. B. Financial condition. Any risk retention group doing business in this State shall submit to the Director: (1) a copy of the group’s financial statement
submitted to the state in which the risk retention group is organized and licensed, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist (under criteria established by the NAIC);
(2) a copy of each examination of the risk retention
group as certified by the public official conducting the examination;
(3) upon request by the Director, a copy of any
information or document pertaining to any outside audit performed with respect to the risk retention group; and
(4) such information as may be required to verify its
continuing qualification as a risk retention group under subsection (11) of Section 123B-2.
C. Taxation. (1) Each risk retention group shall be liable for the
payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State, and shall report to the Director the net premiums written for risks resident or located within this State. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer.
(2) To the extent licensed insurance producers are
utilized pursuant to Section 123B-11, they shall report to the Director the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not organized in this State.
(3) To the extent that licensed insurance producers
are utilized pursuant to Section 123B-11, each such producer shall keep a complete and separate record of all policies procured from each such risk retention group, which record shall be open to examination by the Director, as provided in Section 506.1 of this Code. These records shall, for each policy and each kind of insurance provided thereunder, include the following:
(a) the limit of the liability; (b) the time period covered; (c) the effective date; (d) the name of the risk retention group which
issued the policy;
(e) the gross premium charged; and (f) the amount of return premiums, if any. D. Compliance With unfair claims practices provisions. Any risk retention group, its agents and representatives shall be subject to the unfair claims practices provisions of Sections 154.5 through 154.8 of this Code. E. Deceptive, false, or fraudulent practices. Any risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices. However, if the Director seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction. F. Examination regarding financial condition. Any risk retention group must submit to an examination by the Director to determine its financial condition if the commissioner of insurance of the jurisdiction in which the group is organized and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the Director. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the NAIC’s Examiner Handbook. G. Notice to purchasers. Every application form for insurance from a risk retention group and the front page and declaration page of every policy issued by a risk retention group shall contain in 10 point type the following notice:
“NOTICE
This policy is issued by your risk retention group. Your risk retention group is not subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty fund protection is not available for your risk retention group”. H. Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited: (1) the solicitation or sale of insurance by a risk
retention group to any person who is not eligible for membership in such group; and
(2) the solicitation or sale of insurance by, or
operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.
I. Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies. J. Prohibited coverage. No risk retention group may offer insurance policy coverage prohibited by Articles IX or XI of this Code or declared unlawful by the Illinois Supreme Court; provided however, a risk retention group organized and licensed in a state other than this State that selects the law of this State to govern the validity, construction, or enforceability of policies issued by it is permitted to provide coverage under policies issued by it for penalties in the nature of compensatory damages including, without limitation, punitive damages and the multiplied portion of multiple damages, so long as coverage of those penalties is not prohibited by the law of the state under which the risk retention group is organized. K. Delinquency proceedings. A risk retention group not organized in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a conservation, rehabilitation, liquidation, or other delinquency proceeding commenced by the Director or by another state insurance commissioner if there has been a finding of financial impairment after an examination under subsection F of Section 123B-4 of this Article. L. Compliance with injunctive relief. A risk retention group shall comply with an injunctive order issued in another state by a court of competent jurisdiction or by a United States District Court based on a finding of financial impairment or hazardous financial condition. M. Penalties. A risk retention group that violates any provision of this Article will be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license or the right to do business in this State, or both. N. (Blank).
