Statutes > Illinois Statutes > CHAPTER 215 INSURANCE > 215 ILCS 5/ Illinois Insurance Code. > Article III - Domestic Mutual Companies

Article III - Domestic Mutual Companies


 
    (215 ILCS 5/Art. III heading)
ARTICLE III. DOMESTIC MUTUAL COMPANIES
(Article scheduled to be repealed on January 1, 2017)

    (215 ILCS 5/36)(from Ch. 73, par. 648)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 36. Scope of article. This article shall apply to all domestic mutual companies transacting or being organized to transact any of the kinds of business enumerated in section 4.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/37)(from Ch. 73, par. 649)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 37. Name. The corporate name of any company organized under this article shall contain the word "Mutual" and shall not be the same as, or deceptively similar to, the name of any domestic company, or of any foreign or alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/38)(from Ch. 73, par. 650)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 38. Principal office and place of business. The principal office of any company organized under this article shall be located in this State. Unless the Director has approved otherwise, the principal place of business of any company organized under this article shall be located in this State.
(Source: P.A. 82‑498.)

    (215 ILCS 5/39)(from Ch. 73, par. 651)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 39. Authorized kinds of business.
    (1) Companies may be organized under this article either for the purpose of transacting any of the kind or kinds of business enumerated in Class 1 of Section 4, or for the purpose of transacting any of the kind or kinds of business enumerated in Classes 2 and 3 of that section.
    (2) A domestic company may, notwithstanding limitations otherwise applicable, and provided it maintains books and records which account for such business, engage directly in any of the following businesses: (a) rendering investment advice; (b) rendering services related to the functions involved in the operation of its insurance business including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal and collection services; (c) acting as administrative agent for a health or welfare program; (d) any other business activity reasonably complementary or supplementary to its insurance business; either to the extent necessarily or properly incidental to the insurance business the company is authorized to do in this State or to the extent approved by the Director and subject to any limitations he may prescribe for the protection of the interests of the policyholders of the company taking into account the effect of such business on the company's existing insurance business and its surplus, the proposed allocation of the estimated cost of such business and the risks inherent in such business as well as relative advantages to the company and its policyholders of conducting such business directly instead of through a subsidiary.
(Source: P.A. 77‑673.)

    (215 ILCS 5/40)(from Ch. 73, par. 652)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 40. Directors or trustees.
    (1) After the date of incorporation, as determined by Section 48, and until the first meeting of the members, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by a board of directors.
    (2) Upon the issuance of a certificate of authority to a company organized under this Article, the corporate powers shall be exercised by, and its business and affairs shall be under the control of, a board of directors or trustees composed of not less than 3 nor more than 21 natural persons who are members and who are at least 18 years of age and at least 3 of whom are residents and citizens of this State. After June 30, 2002, at least 20%, but not less than one, of the directors of a company that is not subject to Section 131.20b shall be persons who are not officers or employees of the company. A person convicted of a felony may not be a director, and all directors shall be of good character and known professional, administrative, or business ability, such business ability to include a practical knowledge of insurance, finance, or investment. The first board of directors or trustees shall be elected at the first meeting of the members, and all directors or trustees shall be elected annually thereafter, except only as provided in subsection (3).
    (3) The articles of incorporation may provide for the division of the board into classes, as nearly equal in number as possible, and fix the term of office for each class, but no term shall be for more than 3 years.
    (4) Meetings of the board of directors or trustees, regular or special, may be held either within or without the State. Meetings of the board of directors or trustees shall be upon such notice as the by‑laws may prescribe. Attendance of a director or trustee at any meeting shall constitute a waiver of notice of such meeting except where a director or trustee attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or trustees need be specified in the notice or waiver of notice of such meeting, unless expressly otherwise provided by this Code. Unless specifically prohibited by the articles of incorporation or by‑laws, members of the board of directors or of any committee of the board of directors may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Unless specifically prohibited by the articles of incorporation or by‑laws, members of the board of directors or of any committee of the board of directors may take action without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of the directors entitled to vote with respect to the subject matter thereof, or by all of the members of such committee, as the case may be. The consent shall be evidenced by one or more written approvals, each of which sets forth the action taken and bears the signature of one or more directors or committee members. All approvals evidencing the consent shall be filed in the company's corporate records. The action taken shall be effective when all of the directors, or members of the committee, have approved the consent unless the consent specifies a different effective date.
    (5) A company may indemnify any person in conformance with subsection (7) of Section 10.
(Source: P.A. 92‑140, eff. 7‑24‑01.)

    (215 ILCS 5/41)(from Ch. 73, par. 653)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 41. Executive committee. If the by‑laws so provide, the board of directors or trustees, by a resolution adopted by a majority of the whole board, may designate three or more of their number to constitute an executive committee, which committee shall, to the extent provided in the resolution or in the by‑laws, have and exercise, during the interim between the meetings of the board, all of the authority of the board in the management of the company, but the designation of such committee shall not relieve the board or any member thereof of any responsibility imposed by law.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/42)(from Ch. 73, par. 654)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 42. By‑laws.
    (1) The incorporators shall adopt by‑laws for the company which shall not be altered, amended, or repealed prior to the issuance of a certificate of authority to the company without the approval of the Director. The by‑laws shall provide that each policyholder of the company shall be a member of the company and shall be entitled to one or more votes in person or by proxy, based upon the amount of insurance in force, the number of policies held or the amount of premium paid, as shall be stated in such by‑laws.
    (2) After a certificate of authority is issued to the company, the power to make, alter, amend or repeal by‑laws shall be vested in the board of directors or trustees unless reserved to the members by the articles of incorporation.
    (3) The by‑laws of a mutual legal reserve life company shall provide for a specific premium and that there shall be no assessment or contingent liability on the part of the member.
    (4) The by‑laws of a mutual company other than life shall provide
        (a) for a specific premium or premium deposit; and
        (b) except as provided in section 55, for a
     contingent liability of each member in an amount not less than one nor more than ten times the specific premium or premium deposit stated in the policy.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/43)(from Ch. 73, par. 655)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 43. Minimum surplus requirements.
    (1) No company organized after December 31, 1985 under this Article may receive a certificate of authority from the Director to issue policies or contracts of insurance until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it is organized to write, as set forth in the following table:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
     least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
     (i) or (j), a surplus of at least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (1) or Class 3,
     any or all clauses or any combination thereof, a surplus of at least $1,000,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,000,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $250,000;
     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (2) Every company subject to this Article and organized on or after June 28, 1965 must have and at all times maintain a minimum surplus equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such company organized prior to June 28, 1965 must have and at all times maintain a minimum surplus equal to that which would have been required for that particular company at the time it was issued a Certificate of Authority. Any company which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized. Any company organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular company, additional minimum surplus of not less than $300,000.
    (3) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 1986 and at all times maintain until December 31, 1990 additional minimum surplus of $200,000.
    (4) Provided, however, mutual companies organized prior to October 1, 1972 and authorized to engage only in insurance business as specified in Class 2(f) of Section 4 on an assessable basis shall not be required to establish an additional minimum surplus as provided herein.
    (5) Subsections (2) and (3) shall be applicable until December 31, 1990 for all companies organized prior to January 1, 1986; thereafter, such companies must have and maintain surplus as required by subsections (7) and (8).
    (6) Every company subject to this Article and organized after December 31, 1985 under this Article must maintain minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
     least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
     (i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (1) or Class 3,
     any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (7) Any company organized prior to January 1, 1986, regulated under this Article must have by December 31, 1990, and thereafter maintain until December 31, 1995, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
     least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
     (i) or (j), a surplus of at least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (1) or Class 3,
     any or all clauses or any combination thereof, a surplus of at least $600,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,200,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $100,000;
     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (8) Any company organized prior to January 1, 1986, regulated under this Article must have by December 31, 1995, and thereafter maintain at all times, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
     least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
     (i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (1) or Class 3,
     any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (9) The Director shall take action under Section 60 of this Code against any company which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders", as it appears on the annual statement of a mutual company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.
(Source: P.A. 84‑934.)

    (215 ILCS 5/44)(from Ch. 73, par. 656)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 44. Articles of incorporation. Any one or more natural persons, at least one of whom is a resident of Illinois, who desire to form a company under this article, shall sign and acknowledge before an officer authorized to take acknowledgments articles of incorporation in duplicate. The articles shall set forth
        (a) the corporate name;
        (b) the location of its principal office;
        (c) the period of duration, which may be perpetual;
        (d) the class or classes of insurance business, as
     provided in section 4, in which it proposes to engage, and the kinds of insurance in each class it proposes to write;
        (e) the name of the governing body of the company,
     whether board of trustees or board of directors, and the number, the terms of office of and the manner of electing the members of the board; and
        (f) such other provisions not inconsistent with law
     as may be deemed by the incorporators to be necessary or advisable.
(Source: P.A. 84‑502.)

    (215 ILCS 5/45)(from Ch. 73, par. 657)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 45. Documents to be delivered to director by incorporators. Upon the execution of the articles of incorporation, there shall be delivered to the Director
        (a) duplicate originals of the articles of
     incorporation;
        (b) a copy of the by‑laws adopted by the
     incorporators;
        (c) 2 organization bonds, or the cash or securities,
     provided for in Section 46;
        (d) the form of guaranty fund agreements and of
     guaranty capital shares, if any, as provided in section 56 to be issued in connection with solicitation of surplus; and
        (e) the form of escrow agreement for the deposit of
     cash or securities.
(Source: P.A. 84‑502.)

    (215 ILCS 5/45.1)(from Ch. 73, par. 657.1)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 45.1. Escrow Agreements. The company shall designate a bank or trust company with whom it will enter into an escrow agreement, which agreement shall state that the organization surplus shall be placed in escrow and remain so, until an organization examination has been completed. When the examination has been completed the escrow agent is authorized to purchase securities for deposit as required by Section 53 and forward them to the Director. The escrow agent is authorized to release the balance of the escrowed funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.
(Source: P.A. 84‑502.)

    (215 ILCS 5/46)(from Ch. 73, par. 658)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 46. Organization bonds. The incorporators shall deliver to the Director two bonds in the same penalties and containing the same provisions, so far as applicable, as the bonds required for the organization of a stock company by section 16, for the use and benefit of the State of Illinois and subscribers, members and creditors, or in lieu of delivering such bonds, the incorporators may deposit cash or securities of the same kind and amount on the same terms and conditions, so far as applicable, as provided by said section.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/47)(from Ch. 73, par. 659)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 47. Publication of intention.
    (1) Upon compliance with the provisions of section 45, the incorporators shall cause to be published in a newspaper of general circulation in this State, in the county where the principal office of the company is to be located, once each week for three consecutive weeks, a notice setting forth
        (a) their intent to form the company and the proposed
     name thereof;
        (b) the class or classes of insurance business in
     which the company proposes to engage; and
        (c) the address where its principal office shall be
     located.
    (2) Proof of such publication made by a certificate of the publisher or his agent shall be delivered to the Director.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/48)(from Ch. 73, par. 660)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 48. Approval of documents. The documents and papers so delivered to the Director may be approved or disapproved by the Director and the incorporators are entitled to a hearing in the same manner as provided in section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director, the Director must file in his office the bylaws, bond or securities and one of the duplicate originals of the articles of incorporation, and endorse upon the other duplicate original his approval and the month, day and year of approval and deliver it to the incorporators. The company is deemed to be fully organized on the date of the approval of the articles of incorporation by the Director, and that date is the date of incorporation of the company.
(Source: P.A. 82‑498.)

    (215 ILCS 5/49)(from Ch. 73, par. 661)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 49. Recording of articles of incorporation. The duplicate original of the articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is to be located.
(Source: P.A. 83‑358.)

    (215 ILCS 5/50)(from Ch. 73, par. 662)
    (Section scheduled to be repealed on January 1, 2017)
    Sec. 50.