Article VII - Unauthorized Companies
(215 ILCS 5/Art. VII heading) ARTICLE VII. UNAUTHORIZED COMPANIES
(215 ILCS 5/121) (from Ch. 73, par. 733)
Sec. 121. Transacting business without certificate of authority prohibited.
(1) It shall be unlawful for any company to enter into a contract of insurance as an insurer or to transact insurance business in this State, without a certificate of authority from the Director; provided that this subsection shall not apply to contracts procured by agents under the authority of section 445, nor to contracts of reinsurance.
(2) The following acts, if performed in this State, shall be included among those deemed to constitute transacting insurance business in this State:
(a) maintaining an agency or office where contracts are executed which are or purport to be contracts of insurance with citizens of this or any other State;
(b) maintaining files or records of contracts of insurance; or
(c) receiving payment of premiums for contracts of insurance.
(3) Any company that violates any of the provisions of subsections (1) and (2) of this section shall be guilty of a business offense and shall be required to pay a penalty of not less than $100 nor more than $1000 for each offense, to be recovered in the name of the People of the State of Illinois by the State's Attorney of the county in which the violation occurs and the penalty so recovered shall be paid into the county treasury. Each day in which a violation occurs shall constitute a separate offense.
(4) The failure of a company to obtain a certificate of authority shall not impair the validity of any act or contract of such company and shall not prevent such company from defending any action in any court of this State, but no company transacting insurance business in this State without a certificate of authority shall be permitted to maintain an action in any court of this State to enforce any right, claim or demand arising out of the transaction of such business until such company shall have obtained a certificate of authority. Nor shall an action be maintained in any court of this State by any successor or assignee of such company on any such right, claim or demand originally held by such company until a certificate of authority shall have been obtained by such company or by a company which has acquired all or substantially all of its assets.
(Source: P.A. 83‑345.) |
(215 ILCS 5/121‑1) (from Ch. 73, par. 733‑1)
Sec. 121‑1. Purpose of article. The purpose of this Article is to subject certain insurers to the jurisdiction of the Director of Insurance and the courts of this State in suits by or on behalf of the State. The General Assembly declares that it is concerned with the protection of residents of this State against acts by insurers not authorized to do an insurance business in this State, by the maintenance of fair and honest insurance markets, by protecting authorized insurers which are subject to regulation from unfair competition by unauthorized insurers, and by protecting against the evasion of the insurance regulatory laws of this State. In furtherance of this State interest, the General Assembly in this Article provides methods for substituted service of process upon such insurers in any proceeding, suit or action in any court and substituted service of any notice, order, pleading or process upon such insurers in any proceeding by the Director of Insurance to enforce or effect full compliance with the insurance laws of this State. In so doing, the State exercises its powers to protect its residents and to define what constitutes transacting an insurance business in this State, and also exercises powers and privileges available to this State under Public Law 79‑15, 79th Congress of the United States, Chapter 20, 1st Sess., S. 340, 59 Stat. 33; 15 U.S.C. ##1011 through 1015, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
(Source: P.A. 77‑1565.) |
(215 ILCS 5/121‑2) (from Ch. 73, par. 733‑2)
Sec. 121‑2. Transacting business without certificate of authority prohibited ‑ Exempt transactions. It is unlawful for any insurer to transact insurance business in this State, (as described in Section 121‑3,) without a certificate of authority from the Director. This Section does not however, apply to any transaction described in Sections 121‑2.01 through 121‑2.10.
(Source: P.A. 89‑124, eff. 7‑7‑95.) |
(215 ILCS 5/121‑2.01) (from Ch. 73, par. 733‑2.01)
Sec. 121‑2.01. The lawful transaction of business under Section 445.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.02) (from Ch. 73, par. 733‑2.02)
Sec. 121‑2.02. The lawful transaction of reinsurance by insurers.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.03) (from Ch. 73, par. 733‑2.03)
Sec. 121‑2.03. Transactions in this State involving a policy lawfully solicited, written, and delivered outside of this State covering only subjects of insurance not resident, located, or expressly to be performed in this State at the time of issuance, and which transactions are subsequent to the issuance of such policy.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.04) (from Ch. 73, par. 733‑2.04)
Sec. 121‑2.04. Attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.05) (from Ch. 73, par. 733‑2.05)
Sec. 121‑2.05. Group insurance policies issued and delivered in other State‑Transactions in this State. With the exception of insurance transactions authorized under Sections 230.2 or 367.3 of this Code, transactions in this State involving group legal, group life and group accident and health or blanket accident and health insurance or group annuities where the master policy of such groups was lawfully issued and delivered in, and under the laws of, a State in which the insurer was authorized to do an insurance business, to a group properly established pursuant to law or regulation, and where the policyholder is domiciled or otherwise has a bona fide situs.
(Source: P.A. 86‑753.) |
(215 ILCS 5/121‑2.06) (from Ch. 73, par. 733‑2.06)
Sec. 121‑2.06. Transactions in this State involving any policy of insurance or annuity contract issued before the effective date of this amendatory Act of 1971.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.07) (from Ch. 73, par. 733‑2.07)
Sec. 121‑2.07. Transactions in this State relative to a policy issued or to be issued outside this State involving insurance on vessels, craft or hulls, cargos, marine builder's risk, marine protection and indemnity or other risk, including strikes and war risks commonly insured under ocean or wet marine forms of policy.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑2.08) (from Ch. 73, par. 733‑2.08)
Sec. 121‑2.08. Transactions in this State involving contracts of insurance issued to one or more industrial insureds. For purposes of this Section "industrial insured" is an insured:
(a) which procures the insurance of any risk or risks other than life and annuity contracts by use of the services of a full time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant;
(b) whose aggregate annual premiums for insurance on all risks, except for life and accident and health insurance, total at least $100,000; and
(c) which either (i) has at least 25 full time employees, (ii) has gross assets in excess of $3,000,000, or (iii) has annual gross revenues in excess of $5,000,000.
(Source: P.A. 90‑794, eff. 8‑14‑98.) |
(215 ILCS 5/121‑2.09) (from Ch. 73, par. 733‑2.09)
Sec. 121‑2.09. Transactions in this State involving bankers' blanket bonds or directors' and officers' liability insurance issued by a captive insurance company, formed exclusively for the purpose of providing directors' and officers' liability and bankers' blanket bond insurance to a bank or bank holding company, as such terms are defined in Section 2 of "The Illinois Bank Holding Company Act of 1957", as amended, if the aggregate annual premiums for each bank or bank holding company for insurance on all of its property and liability risks total at least $25,000, and such insurance is procured by a full‑time employee acting as an insurance manager or buyer or through the services of a regularly and continuously retained qualified insurance consultant.
(Source: P.A. 84‑1431.) |
(215 ILCS 5/121‑2.10)
Sec. 121‑2.10. Exempt charitable gift annuities. The insurance laws of this State, including this Code, do not apply to any charitable gift annuity, as defined in Section 501(m)(5) of the Internal Revenue Code, issued by an organization that is described in Section 170(c) of the Internal Revenue Code, if either (i) an insurer authorized to transact business in this State is directly obligated to the annuitant or (ii) the organization has been in active operation for not less than 20 years before the date the annuity is issued and has an unrestricted fund balance of not less than $2,000,000 on the date the annuity is issued. For purposes of this Section, "Internal Revenue Code" refers to the Internal Revenue Code of 1986, as amended, and corresponding provisions of subsequent federal tax laws.
(Source: P.A. 89‑124, eff. 7‑7‑95; 89‑485, eff. 6‑21‑96.) |
(215 ILCS 5/121‑3) (from Ch. 73, par. 733‑3)
Sec. 121‑3. Transaction of insurance business defined. Any of the following acts in this State, effected by mail or otherwise by or on behalf of an unauthorized insurer, constitutes the transaction of an insurance business in this State.
(a) The making of or proposing to make, as an insurer, an insurance contract.
(b) The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety.
(c) The taking or receiving of any application for insurance.
(d) The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof.
(e) The issuance or delivery of contracts of insurance to residents of this State or to persons authorized to do business in this State.
(f) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurer in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a fixing of rates or investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and arising out of that contract, or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this State. This paragraph does not prohibit full‑time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of that employer.
(g) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of this Act.
(h) The transacting or proposing to transact any insurance business in substance equivalent to any of the foregoing in a manner designed to evade this Act.
The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect. Unless otherwise indicated, the term "insurer" as used in this Article includes all corporations, associations, partnerships and individuals, engaged as principals in the business of insurance and also includes interinsurance exchanges and mutual benefit societies.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑4) (from Ch. 73, par. 733‑4)
Sec. 121‑4. Validity of contracts ‑ court actions.) The failure of an insurer transacting insurance business in this State to obtain a certificate of authority does not impair the validity of any act or contract of that insurer nor does it prevent that insurer from defending any action in any court of this State. However, no insurer transacting insurance business in this State without a certificate of authority may maintain an action in any court of this State to enforce any right, claim or demand arising out of the transaction of that business until the insurer has obtained a certificate of authority.
If any such unauthorized insurer fails to pay any claim or loss within the provisions of such an insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract shall be liable to the insured for the full amount of the claim or loss as provided in that insurance contract.
(Source: P.A. 79‑1362.) |
(215 ILCS 5/121‑5) (from Ch. 73, par. 733‑5)
Sec. 121‑5. Injunctive proceedings. Whenever the Director believes, from evidence satisfactory to him that any insurer is violating or about to violate Section 121‑2 of this Act, the Director may, through the Illinois Attorney General, cause a complaint to be filed in the Circuit Court of Cook County, or the Circuit Court of Sangamon County, to enjoin and restrain that insurer from continuing such violation or engaging therein or doing any act in furtherance thereof. The court shall have jurisdiction of the proceeding and may make and enter an order or judgment awarding such preliminary or final injunctive relief as, in its judgment, is proper.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑6) (from Ch. 73, par. 733‑6)
Sec. 121‑6. Acts constituting Secretary of State as agent for process. Any act of transacting an insurance business, as set forth in Section 121‑3; by any unauthorized insurer constitutes an irrevocable appointment by that insurer, binding upon him, his executor or administrator, or successor in interest if a corporation, of the Secretary of State, to be the true and lawful attorney of such insurer upon whom may be served all lawful process in any action, suit, or proceeding in any court by the Director or by the State and upon whom may be served any notice, order, pleading or process in any proceeding before the Director which arises out of transacting an insurance business in this State by that insurer. Any act of transacting an insurance business in this State by any unauthorized insurer signifies its agreement that any lawful process in such a court action, suit, or proceeding and any such notice, order, pleading, or process in an administrative proceeding before the Director so served shall be of the same legal force and validity as personal service of process in this State upon that insurer.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑7) (from Ch. 73, par. 733‑7)
Sec. 121‑7. Service of process ‑ notice. Service of process in an action described in Section 121‑6 shall be made by delivering to and leaving with the Secretary of State, or some person in apparent charge of his office, 2 copies thereof and by payment to the Secretary of State of the fee prescribed by law. Service upon the Secretary of State as such attorney shall be service upon the principal.
The Secretary of State shall forthwith forward by certified mail one of the copies of the process or notice, order, pleading, or process in proceedings before the Director to the defendant in such court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at its last known principal place of business and shall keep a record of all process so served on him which shall show the day and hour of service. Such service is sufficient if:
(a) Notice of such service and a copy of the court process or the notice, order, pleading, or process in such administrative proceeding are sent within 10 days thereafter by certified mail by the plaintiff or the plaintiff's attorney in the court proceeding, or by the Director of Insurance in the administrative proceeding, to the defendant in the court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at the last known principal place of business of the defendant in the court or administrative proceeding.
(b) The defendant's receipt or receipts issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff's attorney in a court proceeding or of the Director in an administrative proceeding, showing compliance therewith are filed with the clerk of the court in which such action, suit, or proceeding is pending or with the Director in administrative proceedings, by the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within such further time as the court or Director, as the case may be, may allow.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑8) (from Ch. 73, par. 733‑8)
Sec. 121‑8. Judgment or default ‑ time limitation. No plaintiff is entitled to a judgment or to a determination by default in any court or administrative proceeding in which court process or notice, order, pleading, or process in proceedings before the Director is served under Section 121‑7 until the expiration of 45 days from the date of filing of the affidavit of compliance under that Section.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑9) (from Ch. 73, par. 733‑9)
Sec. 121‑9. Other proceedings not barred. Nothing in this Article limits or affects the right to serve any process, notice, order, or demand upon any person or insurer in any other manner now or hereafter permitted by law.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑10) (from Ch. 73, par. 733‑10)
Sec. 121‑10. Pleadings by unauthorized insurer ‑ bond or certificate of authority. Before any unauthorized insurer files or causes to be filed any pleading in any court action, suit or proceeding or any notice, order, pleading, or process in an administrative proceeding before the Director instituted against such person or insurer, by services made as provided in Section 121‑7, such insurer must either:
(a) Deposit with the clerk of the court in which such action, suit, or proceeding is pending, or with the Director in administrative proceedings before him, cash or securities, or file with such clerk or Director a bond with good and sufficient sureties, to be approved by the clerk or Director in an amount to be fixed by the court or Director sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding; or
(b) Procure a certificate of authority to transact the business of insurance in this State. In considering the application of an insurer for a certificate of authority, for the purposes of this paragraph, the Director need not assert the provisions of Section 444 against such insurer with respect to its application if he determines that such company would otherwise comply with the requirements for a certificate of authority.
(Source: P.A. 77‑1565.) |
(215 ILCS 5/121‑11) (from Ch. 73, par. 733‑11)
Sec. 121‑11. Postponement of proceedings ‑ Motions by unauthorized insurer. The Director, in any administrative proceeding in which service is made under Section 121‑7, may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with Section 121‑10 and to defend such action.
Nothing in this Article prevents an unauthorized insurer from filing a motion to quash process or to set aside service thereof made under Section 121‑7, on the ground that the unauthorized insurer has not done any of the acts enumerated in Section 121‑3.
(Source: P.A. 83‑346.) |
(215 ILCS 5/121‑12) (from Ch. 73, par. 733‑12)
Sec. 121‑12. Enforcement by Attorney General. The Attorney General, upon request of the Director, may proceed in the courts of this State or any reciprocal State to enforce an order or decision in any court proceeding or in any administrative proceeding before the Director.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑13) (from Ch. 73, par. 733‑13)
Sec. 121‑13. Definitions.) As used in this Article:
(a) "Reciprocal state" means any State or territory of the United States and the laws of which contain procedures substantially similar to those specified in this Article for the enforcement of judgments or orders issued by courts located in other States or territories of the United States, against an insurer incorporated or authorized to do business in that State or territory.
(b) "Foreign judgment" means any judgment or order relating to fraudulent claims practices, false and deceptive advertising, unfair methods of transacting business, or payment of taxes, of a court located in a "reciprocal state", including a court of the United States located therein, against any insurer incorporated or authorized to do business in this State.
(c) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of this State.
(Source: P.A. 79‑1362.) |
(215 ILCS 5/121‑14) (from Ch. 73, par. 733‑14)
Sec. 121‑14. List of reciprocal states. The Director shall determine which States and territories qualify as reciprocal States and shall maintain at all times an up‑to‑date list of those States.
(Source: P. A. 77‑1565.) |
(215 ILCS 5/121‑15) (from Ch. 73, par. 733‑15)
Sec. 121‑15. Filing and status of foreign judgments.) A copy of any foreign judgment authenticated in accordance with the statutes of this State may be filed in the office of the clerk of any circuit court of this State. The clerk, upon verifying with the Director that the judgment or order qualifies as a "foreign judgment", shall treat the foreign judgment in the same manner as a judgment of any circuit court of this State. A foreign judgment so filed has the same effect, is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying and may be enforced or satisfied in like manner as a judgment of any circuit court of this State.
(Source: P.A. 79‑1362.) |
(215 ILCS 5/121‑16) (from Ch. 73, par. 733‑16)
Sec. 121‑16. Notice of filing.) At the time of the filing of a foreign judgment, the Attorney General shall make and file with the clerk of the court an affidavit setting forth the name and last known post office address of the defendant.
Promptly upon the filing of the foreign judgment and the affidavit, the clerk shall mail notice of the filing of the foreign judgment to the defendant at the address given and to the Director and shall note that mailing in the docket. In addition, the Attorney General may mail a notice of the filing of the foreign judgment to the defendant and to the Director and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk does not affect the enforcement proceedings if proof of mailing by the Attorney General has been filed.
No process for enforcement of a foreign judgment filed under this Article may issue until 30 days after the date the judgment is filed.
(Source: P.A. 84‑546.) |
(215 ILCS 5/121‑17) (from Ch. 73, par. 733‑17)
Sec. 121‑17. Stay.) If the defendant shows the circuit court that an appeal from the foreign judgment is pending or will be taken, or that a stay of enforcement has been granted, the court shall stay enforcement of the foreign judgment until the appeal is concluded, the time for appeal expires or the stay of enforcement expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the judgment required by the State in which it was entered.
If the defendant shows the circuit court any ground upon which enforcement of a judgment of any circuit court of this State would be stayed, the court shall stay enforcement of the foreign judgment for an appropriate period, upon requiring the same security for satisfaction of the judgment as is required in this State.
(Source: P.A. 84‑546.) |
(215 ILCS 5/121‑18) (from Ch. 73, par. 733‑18)
Sec. 121‑18. Fees. Any person filing a foreign judgment must pay to the clerk of the court such fees as may apply in other cases. Fees for docketing, transcription or other enforcement proceedings shall be as provided for judgment of the circuit court.
(Source: P.A. 79‑1362.) |
(215 ILCS 5/121‑19) (from Ch. 73, par. 733‑19)
Sec. 121‑19. Fine for unauthorized insurance. Any unauthorized insurer who transacts any unauthorized act of an insurance business as set forth in this Act is guilty of a business offense and may be fined not more than $20,000.
(Source: P. A. 93‑32, eff. 7‑1‑03.) |