2023 Illinois Compiled Statutes › Chapter 215 - INSURANCE › 215 ILCS 5/ - Illinois Insurance Code. › Article XXXIV - Illinois Insurance Guaranty Fund

(215 ILCS 5/Art. XXXIV heading)
ARTICLE XXXIV.  
		ILLINOIS INSURANCE GUARANTY FUND
(215 ILCS 5/532) (from Ch. 73, par. 1065.82)
Sec. 532. Purpose.
(a) The purpose of this Article is to provide a mechanism
for the payment of covered claims under certain insurance policies, to
avoid excessive delay in payment of covered claims, to avoid financial loss to claimants or policyholders
because of the entry of an Order of Liquidation against an insolvent
company, including through services offered to the Director in her or his capacity as receiver under Article XIII of this Code that relate to covered claims, to provide a Fund to assess among member companies the costs of such protection and maintain the continuity and self-sufficient operation of the Fund, and to offset the costs associated with maintaining the Fund's continuity and self-sufficient operations when practical by providing assistance and services to the Director in her or his capacity as receiver under Article XIII of this Code as described in this Section.
(b)   The purpose of this Article is also to provide a mechanism for the Fund to participate in and facilitate the process by which the assets of an insolvent company are marshaled and distributed pursuant to Article XIII of this Code beyond reimbursing the cost of covered claims. This subsection (b) is inoperative 5 years after the effective date of this amendatory Act of the 102nd General Assembly.
(Source: P.A. 102-396, eff. 8-16-21.)
(215 ILCS 5/533) (from Ch. 73, par. 1065.83)
Sec. 533. Scope. This Article applies to all of the kinds of insurance
written on a direct basis which are included in Class 2 and
Class 3 of Section 4 of this Code, except that
it shall not apply to:
(a) accident and health insurance written under clause (a) of Class 2, or
(b) mortgage guaranty or other financial guaranty written as
suretyship obligations or insurance under clause (g), clause (h)
or clause (i) of Class 2 or otherwise, or
(c) fidelity or surety bonds, or any other bonding obligations other
than employee fidelity bonds, or
(d) marine insurance other than inland marine insurance, written  under
clause (d) of Class 3, or
(e) insurance of warranties or service contracts, including insurance that
provides for the
repair, replacement, or service of goods or property or indemnification for
repair, replacement, or service for the operational or structural failure of
the goods or property due to a defect in materials, workmanship, or normal wear
and tear or provides reimbursement for the liability incurred by the issuer of
agreements or service contracts that provide these benefits, or
(f) any claim servicing agreement or insurance policy which contains a
retrospective rating or other premium adjustment agreement under which
premiums are substantially equal to the losses and loss expenses covered
under the policy or any policy providing retroactive insurance of known loss, or
(g) any insurance which is provided, guaranteed or reinsured pursuant to
the Federal Crop Insurance Program or the National Flood Insurance Program,
including flood insurance written by National Flood Insurance Program
Write Your Own Companies.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/534) (from Ch. 73, par. 1065.84)
Sec. 534. Definitions. For the purposes of this Article, unless the
context requires otherwise, the words and phrases defined in Sections 534.1
through 534.9 have the meanings set forth in those Sections.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/534.1) (from Ch. 73, par. 1065.84-1)
Sec. 534.1. 
		
		"Fund" means the Illinois Insurance Guaranty Fund created by this
Article.
(Source: P.A. 77-305.)
(215 ILCS 5/534.2) (from Ch. 73, par. 1065.84-2)
Sec. 534.2. 
		"Director" means the Director of Insurance of the State of Illinois.
(Source: P.A. 77-305.)
(215 ILCS 5/534.3) (from Ch. 73, par. 1065.84-3)
Sec. 534.3. Covered claim; unearned premium defined.
(a) "Covered claim" means an unpaid claim for a loss
arising out of and within the
coverage of an insurance policy to which this Article applies and which
is in force at the time of the occurrence giving rise to the unpaid
claim, including claims presented during any extended discovery period
which was purchased from the company before the entry of a liquidation
order or which is purchased or obtained from the liquidator after the entry
of a liquidation order, made by a person insured under such policy or by a
person
suffering injury or damage for which a person insured under such policy
is legally liable, and for unearned premium, if:
(i) The company issuing, assuming, or being allocated     the policy becomes an insolvent company as defined in Section 534.4 after the effective date of this Article; and
(ii) The claimant or insured is a resident of this     State at the time of the insured occurrence, or the property from which a first party claim for damage to property arises is permanently located in this State or, in the case of an unearned premium claim, the policyholder is a resident of this State at the time the policy was issued; provided, that for entities other than an individual, the residence of a claimant, insured, or policyholder is the state in which its principal place of business is located at the time of the insured event.
(b) "Covered claim" does not include:
(i) any amount in excess of the applicable limits of     liability provided by an insurance policy to which this Article applies; nor
(ii) any claim for punitive or exemplary damages or     fines and penalties paid to government authorities; nor
(iii) any first party claim by an insured who is an     affiliate of the insolvent company; nor
(iv) any first party or third party claim by or     against an insured whose net worth on December 31 of the year next preceding the date the insurer becomes an insolvent insurer exceeds $25,000,000; provided that an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its affiliates as calculated on a consolidated basis.  However, this exclusion shall not apply to third party claims against the insured where the insured has applied for or consented to the appointment of a receiver, trustee, or liquidator for all or a substantial part of its assets, filed a voluntary petition in bankruptcy, filed a petition or an answer seeking a reorganization or arrangement with creditors or to take advantage of any insolvency law, or if an order, judgment, or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating the insured bankrupt or insolvent or approving a petition seeking reorganization of the insured or of all or substantial part of its assets; nor
(v) any claim for any amount due any reinsurer,     insurer, insurance pool, or underwriting association as subrogated recoveries, reinsurance recoverables, contribution, indemnification or otherwise. No such claim held by a reinsurer, insurer, insurance pool, or underwriting association may be asserted in any legal action against a person insured under a policy issued by an insolvent company other than to the extent such claim exceeds the Fund obligation limitations set forth in Section 537.2 of this Code.
(c) "Unearned Premium" means the premium for the unexpired period of a
policy which has been terminated prior to the expiration of the period for
which premium has been paid and does not mean premium which is returnable
to the insured for any other reason.
(Source: P.A. 101-60, eff. 7-12-19; 102-558, eff. 8-20-21.)
(215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
Sec. 534.4. 
"Insolvent company" means a company
organized as a stock company, mutual company, reciprocal or Lloyds (a)
which holds a certificate of authority to transact insurance
in this State either at the time the policy was issued or when
the insured event occurred, or any company which has assumed or has been allocated
such policy obligation through merger, division, insurance business transfer, consolidation, or
reinsurance, whether or not such assuming company held a
certificate of authority to transact insurance in this State
at the time such policy was issued or when the insured event occurred; and (b)
against which a final Order of Liquidation with a finding of
insolvency to which there is no further right of appeal has been entered by
a court of competent jurisdiction in the company's State of domicile after the
effective date of this Article.
(Source: P.A. 103-75, eff. 6-9-23.)
(215 ILCS 5/534.5) (from Ch. 73, par. 1065.84-5)
Sec. 534.5. 
		Member company. 
		"Member Company" means any insurance
company organized as a
stock company, mutual company, reciprocal or Lloyds, which holds a certificate
of authority to transact
any kind of insurance in this State to
which this Article applies, and which is either:
(a) a domestic insurance company formed before or after the
effective date of this Article; or
(b) a foreign or alien insurance company.
An insurance company shall cease to be a member company effective on the
day following the termination or expiration of its license to transact the
kinds of insurance to which this Article applies; provided, however, that the
insurance company shall remain liable as a member company for any and all
obligations, including obligations for assessments levied before the
termination or expiration of the insurance company's license and assessments
levied after the termination or expiration, based on any insolvency as to which
the determination of insolvency by a court of competent jurisdiction occurs
before the termination or expiration of the insurance company's license.
(Source: P.A. 89-97, eff. 7-7-95.)
(215 ILCS 5/534.6) (from Ch. 73, par. 1065.84-6)
Sec. 534.6. 
		
		"Net direct written premiums" means direct gross premiums
written in this State on insurance policies to which this Article applies, less return
premiums thereon and dividends paid or credited to policyholders on such
direct business. "Net direct written premiums" does not include premiums on
contracts of reinsurance or other contracts between insurers or reinsurers.
(Source: P.A. 85-576.)
(215 ILCS 5/534.7) (from Ch. 73, par. 1065.84-7)
Sec. 534.7. 
		Affiliate. 
		An "affiliate" of a specified person means a
person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with the specified person on
December 31 of the year next
preceding the date the insolvent company became an
insolvent company.
(Source: P.A. 89-97, eff. 7-7-95.)
(215 ILCS 5/534.8) (from Ch. 73, par. 1065.84-8)
Sec. 534.8. 
		
		"Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, the holding of
proxies, by contract other than a commercial contract for goods or
nonmanagement services, or otherwise, unless the power is solely the result
of an official position with or corporate office held by the person.
Control shall be presumed to exist if any person, directly or indirectly,
owns, controls, holds with the power to vote, or holds proxies
representing, 10% or more of the voting securities or voting power of any
other person.  This presumption may be rebutted by a showing that control
does not exist in fact.
(Source: P.A. 85-576.)
(215 ILCS 5/534.9)
Sec. 534.9. Cybersecurity insurance. "Cybersecurity insurance" means a type of insurance under Class 2 of Section 4 of this Code that  involves first-party and third-party coverage, in a policy or endorsement, written on a direct, admitted basis to cover losses and loss mitigation arising out of or relating to data privacy breaches, unauthorized information network security intrusions, computer viruses, ransomware, cyber extortion, identity theft, and similar exposures.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/535) (from Ch. 73, par. 1065.85)
Sec. 535. 
		Creation of the Fund. 
		There is created a nonprofit
unincorporated legal entity to be known as the Illinois Insurance
Guaranty Fund. All member companies as defined in Section 534.5 shall be and
remain members of the Fund as a condition of their authority to transact
business in this State. The Fund shall perform its functions under a
plan of operation established and approved under Section 539 and shall
exercise its powers through a board of directors established under
Section 536. For purposes of administration and assessment, the Fund
shall be divided into 2 separate accounts: (a) the automobile insurance
account; and (b) the account for all other insurance to which this
Article applies, including Workers' Compensation.
(Source: P.A. 85-576.)
(215 ILCS 5/536) (from Ch. 73, par. 1065.86)
Sec. 536. Board of Directors.
(a) The board of directors of the Fund shall consist of not less than 5
nor more than 10 persons, with one public member appointed by the Director, serving terms as established in the plan of
operation. The public member shall be a resident of this State, and he or she shall either (1) be a licensed and certified public accountant under the laws of this State or (2) have earned, and maintain in good standing, the Chartered Property and Casualty Underwriter (CPCU) designation from the American Institute for Chartered Property Casualty Underwriters. The plan of operation shall provide that the board of directors
be elected on the basis of one vote for each member company of the Fund. If
more than one company of a group of wholly owned or controlled companies is a
member company of the Fund only one vote will be allowed for the entire
group. The members of the board of directors shall be elected by member companies
subject to the approval of the Director. Vacancies on the board of
directors shall be filled for the remaining period of the term by the board
of directors, subject to the approval of the
Director.
(b) In approving elections to the board of directors, the Director shall consider
among other things whether all member companies are fairly represented.
(c) Members of the board of directors shall receive no compensation, but may be
reimbursed from the assets of the Fund for expenses incurred by them as
members of the board of directors.
(Source: P.A. 98-202, eff. 1-1-14.)
(215 ILCS 5/537) (from Ch. 73, par. 1065.87)
Sec. 537. 
		
		Duties
and obligations of the Fund.
The Fund shall have the duties and obligations enumerated in Sections
537.1 through 537.9.
(Source: P.A. 82-210.)
(215 ILCS 5/537.1) (from Ch. 73, par. 1065.87-1)
Sec. 537.1. 
		
		The Fund may provide for an equal annual fee of all member
companies on a non-pro rata basis to provide for contingent expenses of the
Fund. This fee may not exceed $500 per member company for any one calendar year.
(Source: P.A. 85-576.)
(215 ILCS 5/537.2) (from Ch. 73, par. 1065.87-2)
Sec. 537.2. Obligation of Fund. The Fund shall be obligated to the
extent of the covered
claims existing prior to the entry of an Order of Liquidation against
an insolvent company and arising within
30 days after the entry of such
Order, or before the policy expiration date if less than 30 days after
the entry of such Order, or before the insured replaces the policy or on
request effects cancellation, if he does so within 30 days after the entry
of such Order. If the entry of an Order of Liquidation occurs on or after
October 1, 1975 and before October 1, 1977, such obligations shall not:
(i) exceed $100,000, or (ii)
include any obligation to refund the first $100 of any unearned premium
claim; and if the entry of an Order of Liquidation occurs on or after October
1, 1977 and before January 1, 1988, such obligations shall
not: (i) exceed
$150,000, except that this limitation shall not apply to any workers compensation
claims, or (ii)
include any obligation to refund the first
$100 of any unearned premium claim; and if the entry of an Order of
Liquidation occurs on or after January 1, 1988 and before January 1, 2011, such obligations shall not:
(i) exceed $300,000, except that this limitation shall not apply to any
workers compensation claims, or (ii) include any obligation to refund the
first $100 of any unearned premium claim or to refund any unearned premium
over $10,000 under any one policy. If the entry of an Order of Liquidation occurs on or after January 1, 2011, then such obligations shall not: (i) exceed $500,000, except that this limitation shall not apply to any workers compensation claims or (ii) include any obligation to refund the first $100 of any unearned premium claim or refund any unearned premium over $10,000 under any one policy. If the entry of an Order of Liquidation occurs on or after January 1, 2023, then such obligations shall not: (i) exceed $500,000, except that this limitation shall not apply to any workers compensation claims, or (ii) exceed without any deduction $50,000 for any unearned premium claim or refund under any one policy. In no event shall the Fund be
obligated to a policyholder or claimant in an amount in excess
of the face amount of the policy from which the claim arises, including, but not limited to, any applicable specific or aggregate limits. For purposes of this Article, obligations arising under an insurance policy written to indemnify a permissibly self-insured employer under subsection (a) of Section 4 of the Workers' Compensation Act for its liability to pay workers' compensation benefits in excess of a specific or aggregate retention shall be subject to the applicable per-claim limits set forth in this Section.
In no event shall the Fund be obligated to pay an amount in excess of $500,000 in the aggregate for all first-party and third-party claims under a policy or endorsement providing cybersecurity insurance as defined in Section 534.9 and arising out of or related to a single insured event, regardless of the number of claims made or number of claimants.
In no event
shall the Fund be liable for any interest on
any
judgment entered against the insured or the insolvent company, or for any
other
interest claim against the insured or the insolvent company, regardless of
whether the insolvent company would have been obligated to pay such interest
under the terms of its policy.  The Fund shall be liable for interest at the
statutory rate on money judgments entered against the Fund until the judgment
is satisfied.
Any obligation of the Fund to defend an insured shall cease upon the
Fund's payment or tender of an amount equal to the lesser of the Fund's
covered claim obligation limit or the applicable policy limit.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/537.3) (from Ch. 73, par. 1065.87-3)
Sec. 537.3. 
		Access to insolvent company records.
The liquidator of an insolvent company shall
permit access by the Fund or its authorized
representatives, and by any similar organization in another state or its
authorized representatives, to such of the
insolvent company's records which are necessary for the
Fund or such similar organization in carrying
out its functions under this Article or similar laws in other states
with regard to covered claims. In
addition, the liquidator shall provide the Fund or its representative, or
such similar organization, with
copies of such records upon the request
and at the expense of
the Fund or such similar organization.
(Source: P.A. 85-576.)
(215 ILCS 5/537.4) (from Ch. 73, par. 1065.87-4)
Sec. 537.4. Fund assumes obligations of insolvent companies. The Fund
shall be deemed the insolvent company to the extent
of the Fund's obligation for covered claims and to such extent
shall have all
rights, duties, and obligations of the insolvent company, subject to the
limitations provided in this Article, as if the company had not become
insolvent, with the
exception that the liquidator shall retain the sole right
to recover any reinsurance proceeds.
The Fund's rights under this Section include, but are not limited to, the
right to pursue and retain salvage and subrogation recoveries on paid covered
claim obligations to the extent paid by the Fund. The extent of the Fund's subrogation rights and any other rights of reimbursement with respect to its covered claims payments shall not be limited as if the Fund were the insolvent company, but shall be determined independently by taking into account the Fund's rights under Section 546 of this Article.
(Source: P.A. 99-387, eff. 8-17-15.)
(215 ILCS 5/537.6) (from Ch. 73, par. 1065.87-6)
Sec. 537.6. Allocation of claims; assessments. The Fund shall allocate
covered claims paid and expenses
incurred between the accounts established by Section 535 separately, and
assess member companies separately for each
account amounts necessary to pay the obligations of the Fund under
Section 537.2 subsequent to the entry of an Order of Liquidation against
an insolvent company, the expenses of handling
covered claims subsequent to such Order of Liquidation and other expenses
authorized by this
Article. The assessments of each member company shall be in the proportion that
the net direct written premiums of the member company for the calendar
year immediately preceding the year in which the assessment is levied on
the kinds of insurance in the account bears to the net direct written
premiums of all member companies for such preceding calendar year on the
kinds of insurance in the account.  Each member company shall be notified
of the assessment not later than 30 days before it is due. Before January 1,
2002, no member
company may be assessed in any year on any account an amount greater
than 1% of that member company's net direct written premiums
on the kinds of insurance in the account for the calendar
year preceding the assessment.  Beginning January 1, 2002, the amount a
member company may be assessed in any year on any account shall be a maximum of
2% of that member company's net direct written premium on the kinds of
insurance in the account for the calendar year preceding the assessment.  This
2% maximum shall apply regardless of the date of any insolvency that gives rise
to the need for the assessment.  If the
maximum assessment, together with the other assets of the Fund in any
account, does not provide, in any one year, in any account, an amount
sufficient to make all necessary payments from that account, the funds
available shall be paid in the manner determined by the Fund and
approved by the Director and the unpaid portion shall be paid as
soon thereafter as funds become available. If requested by a member
company, the Director may exempt or defer the assessment of any member
company, if the assessment would cause the member company's financial
impairment.
In addition to the other assessment authority provided in this Section, the board of directors shall also have the assessment authority to pay off a loan as provided in Section 538.3.  If a loan is projected to be outstanding for 3 years or more, then the board of directors shall have the authority to increase the assessment to 3% of the net direct written premiums for the previous year until the loan has been paid in full.
(Source: P.A. 101-60, eff. 7-12-19.)
(215 ILCS 5/537.7) (from Ch. 73, par. 1065.87-7)
Sec. 537.7. Investigation of claims; disposition.
(a) The Fund shall investigate claims brought against the
Fund and adjust, compromise, settle, and pay covered claims to the extent of
the Fund's
obligation and deny all other claims.
(b) The Fund shall not be bound by a settlement, release, compromise,
waiver, or final judgment executed or entered within 12 months prior to an
order of liquidation and shall have the right to assert all defenses available
to the Fund including, but not limited to, defenses applicable to determining
and enforcing its statutory rights and obligations to any claim.  The Fund
shall be bound by a settlement, release, compromise, waiver, or final judgment
executed or entered more than 12 months prior to an order of liquidation,
but only
if the
claim is a covered claim and the settlement, release, compromise, waiver, or final judgment was not a result of
fraud, collusion, default, or failure to defend.  In addition, with respect to
covered
claims arising from a judgment under a decision, verdict, or finding based on
the default of the insolvent insurer or its failure to defend, upon application
by the Fund, either on its own behalf or on behalf of an insured, the court
shall set aside the judgment, order, decision, verdict,
or finding, and the Fund shall be permitted to defend against the claim on the
merits. The same criteria determining whether the Fund will be bound, as specified in this subsection (b), shall apply to any settlement, release, compromise, waiver, or final judgment entered into by a high net worth insured before the date on which claims by or against that insured became non-exempt for reasons specified in paragraph (iv) of subsection (b) of Section 534.3.
(c) The Fund shall have the right to appoint or
approve and to direct legal counsel
retained under liability insurance policies for the defense
of covered claims as well as the right to appoint or approve and to direct legal counsel and other service providers under any other insurance policies subject to this Article, regardless of any limitations in the policy.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/537.9) (from Ch. 73, par. 1065.87-9)
Sec. 537.9. 
		
		The Fund shall handle claims through its employees or
through one or more companies or other persons employed as servicing facilities.
(Source: P.A. 85-576.)
(215 ILCS 5/538) (from Ch. 73, par. 1065.88)
Sec. 538. Powers
of the Fund. The Fund shall have the powers enumerated in the Sections following this Section and preceding Section 539.
(Source: P.A. 102-396, eff. 8-16-21.)
(215 ILCS 5/538.1) (from Ch. 73, par. 1065.88-1)
Sec. 538.1. 
		
		The Fund may appear in, defend and appeal any action on a claim brought
against it on a covered claim.
(Source: P.A. 77-305.)
(215 ILCS 5/538.2) (from Ch. 73, par. 1065.88-2)
Sec. 538.2. 
The Fund may employ or retain such persons as are necessary to handle
claims, provide policy benefits and services, and perform other duties of the Fund.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/538.3) (from Ch. 73, par. 1065.88-3)
Sec. 538.3. 
The Fund may borrow an amount of money necessary to effect the purposes
of this Article in accord with the plan of operation. The board of directors shall have the authority to pledge all or an appropriate portion of future assessments as necessary to secure a loan that may be needed to pay covered claims.  Until all loans secured by assessments are fully satisfied, the board of directors shall assess the maximum allowable under Section 537.6.
(Source: P.A. 101-60, eff. 7-12-19.)
(215 ILCS 5/538.4) (from Ch. 73, par. 1065.88-4)
Sec. 538.4. Legal actions by Fund. The Fund may sue or be sued, including, but not limited to, taking any legal actions necessary
or proper for recovery of: (i) any unpaid assessments under Section 537.1 or 537.6; (ii) any amounts due to the Fund for salvage and subrogation under Section 537.4 or from insurers described in subsection (a) of Section 546; or (iii) any amounts due from an insured pursuant to subsections (a) and (d) of Section 545.
The Fund's power to sue includes, but is not limited to, the
power and right to
intervene as a party before any court that has jurisdiction over an insolvent
insurer when the Fund is a creditor or potential creditor of the insolvent
insurer.
(Source: P.A. 101-60, eff. 7-12-19.)
(215 ILCS 5/538.5) (from Ch. 73, par. 1065.88-5)
Sec. 538.5. 
		
		The Fund may negotiate and become a party to such contracts as are
necessary to carry out the purposes of this Article.
(Source: P.A. 82-210.)
(215 ILCS 5/538.7) (from Ch. 73, par. 1065.88-7)
Sec. 538.7. 
(a) The Fund may perform such other acts as are necessary or proper to
effectuate the purposes of this Article.
(b)   The Fund may contract with the Office of Special Deputy Receiver or any other person or organizations authorized by law to carry out the duties of the Director in her or his capacity as a receiver under Article XIII of this Code.  The power of the Fund to contract with these persons or entities includes, but is not limited to, providing consulting services and claims administration services that assist with these persons or entities in the performance of their respective statutory and legal functions provided by law.  The Fund may only exercise the authority to contract pursuant to this subsection upon the board of director's written determination that the provisioning of such services will advance the purposes set forth in Section 532. Any contract the Fund may enter into to provide services pursuant to this subsection shall be subordinate and subject to the Fund's statutory obligations to timely pay covered claims and avoid financial loss to claimants or policyholders described in this Article.
This subsection (b) is inoperative 5 years after the effective date of this amendatory Act of the 102nd General Assembly.
(Source: P.A. 102-396, eff. 8-16-21.)
(215 ILCS 5/538.8) (from Ch. 73, par. 1065.88-8)
Sec. 538.8. 
		
		(a) If, at any time, the board of directors finds
that the assets of the Fund in any account exceed the liabilities and
expected costs and expenses of that account, the Fund may refund that amount of assets
of the account which exceed such liabilities, expenses and costs to the
member companies in such a manner as is determined by the board of
directors.
(b) If, at any time, the Fund receives monies as reimbursement from
the estate of an insolvent company, the Fund shall distribute those monies
in accordance with the procedures established in the plan of operation.
(Source: P.A. 85-576.)
(215 ILCS 5/538.9)
Sec. 538.9. Action regarding insolvent company records.
(a) In this Section, "claims information" includes files, records, and electronic data.
(b) The Fund may bring an action against any third-party administrator, agent, attorney, or other representative of the insolvent insurer to obtain custody and control of all claims information related to an insolvent company that are appropriate or necessary for the Fund or a similar association in other states to carry out its duties under this Article. In such an action, the Fund shall have the absolute right through emergency equitable relief to obtain custody and control of such claims information in possession of such third-party administrator, agent, attorney or other representative of the insolvent insurer, regardless of where that claims information may be physically located. In bringing an action under this Section, the Fund shall not be subject to any defense, lien (possessory or otherwise), or other legal or equitable ground whatsoever for refusal to surrender such claims information that might be asserted against the liquidator of the insolvent insurers. To the extent that litigation is required for the Fund to obtain custody and control of the claims information requested and it results in the relinquishment of claims information to the Fund after refusal to provide that information in response to a written demand, the court shall award the Fund its costs, expenses, and reasonable attorney's fees incurred in bringing the action. This Section shall have the same effect on the rights and remedies that the custodian of such claims information may have against the insolvent insurers, so long as these rights and remedies do not conflict with the rights of the Fund to custody and control of the claims information under this Article.
(Source: P.A. 101-60, eff. 7-12-19.)
(215 ILCS 5/539) (from Ch. 73, par. 1065.89)
Sec. 539. 
		Plan of operation. 
		(a) The Fund shall submit to the Director
a plan of operation and any
amendments thereto necessary or suitable to assure the fair, reasonable,
and equitable administration of the Fund. The plan of operation and any
amendments thereto shall become effective upon approval in writing by the
Director.
(b) If the Fund fails to submit a suitable plan of operation within 90
days following the effective date of this Article or if at any time
thereafter the Fund fails to submit suitable amendments to the plan of operation, the
Director shall, after notice and hearing pursuant to Sections 401, 402 and
403 of this Code, adopt and promulgate
such reasonable
rules as are necessary or advisable to effectuate the provisions of this
Article. Such rules shall continue in force until modified by the Director
or superseded by a plan of operation submitted by the Fund and approved
by the Director.
(c) All member companies must comply with the plan of operation.
(Source: P.A. 82-210.)
(215 ILCS 5/540) (from Ch. 73, par. 1065.90)
Sec. 540. 
		
		
		The plan of operation shall do the following as enumerated in Sections
540.1 through 540.9.
(Source: P.A. 77-305.)
(215 ILCS 5/540.1) (from Ch. 73, par. 1065.90-1)
Sec. 540.1. 
		
		The plan of operation shall establish the procedures whereby all the
powers and duties of the Fund under Sections 537.1 through 537.9 will be
performed.
(Source: P.A. 82-210.)
(215 ILCS 5/540.2) (from Ch. 73, par. 1065.90-2)
Sec. 540.2. 
		
		The plan of operation shall establish procedures for handling
assets of the Fund.
(Source: P.A. 77-305.)
(215 ILCS 5/540.3) (from Ch. 73, par. 1065.90-3)
Sec. 540.3. 
		
		The plan of operation shall establish the amount and method of
reimbursing members of the board of directors under subsection (c) of Section 536.
(Source: P.A. 82-210.)
(215 ILCS 5/540.5) (from Ch. 73, par. 1065.90-5)
Sec. 540.5. 
		
		(a) A covered claim, for other than unearned premium, is a claim
which appears on the books and records of the insolvent company as of the
date of the Order of Liquidation or a claim for which notice is given
in writing to the liquidator of the insolvent company's domiciliary state
or to an ancillary receiver in this State, if any, or to the Fund or its
agents prior to the earlier of the last date fixed for the timely
filing of proofs of claim
in the domiciliary liquidation proceedings or 18 months after the entry
of the order of liquidation.  The liquidator or ancillary
receiver in this State, if any, shall periodically submit a list of claims
to the Fund or similar organization in another state.
(b) The Fund shall establish procedures by which
unearned premium claims are to be determined and paid as covered claims.
(Source: P.A. 85-576.)
(215 ILCS 5/540.6) (from Ch. 73, par. 1065.90-6)
Sec. 540.6. 
		
		The plan of operation shall provide that any member company aggrieved by
any final action or decision of the Fund may appeal to the Director within
30 days after the action or decision.
(Source: P.A. 77-305.)
(215 ILCS 5/540.7) (from Ch. 73, par. 1065.90-7)
Sec. 540.7. 
		
		The plan of operation shall establish the procedures whereby selections
for the board of directors will be submitted to the Director.
(Source: P.A. 77-305.)
(215 ILCS 5/540.8) (from Ch. 73, par. 1065.90-8)
Sec. 540.8. 
		
		The plan of operation shall establish the procedures for
disposition of monies reimbursed from the estate of the insolvent company.
(Source: P.A. 85-576.)
(215 ILCS 5/540.9) (from Ch. 73, par. 1065.90-9)
Sec. 540.9. 
		
		
		The plan of operation may contain additional provisions necessary or
proper for the execution of the powers, duties and obligations of the Fund.
(Source: P.A. 77-305.)
(215 ILCS 5/541) (from Ch. 73, par. 1065.91)
Sec. 541. 
		
		The plan of operation may provide that any or all powers and duties
of the Fund, except those under Sections 537.6 and 538.3 may be
delegated to a corporation, association, or other organization which
performs or will perform functions similar to those of this Fund, or its
equivalent, in 2 or more states.
A delegation under this Section shall take effect only with
the approval of both the board of directors and the Director, and may be
made only to a corporation, association, or organization which extends
protection not substantially less favorable and effective than that
provided by this Article.
(Source: P.A. 80-827.)
(215 ILCS 5/543) (from Ch. 73, par. 1065.93)
Sec. 543. 
		
		Duties
and obligations of the Director.
The Director shall have the duties and obligations enumerated in
Sections 543.1 through 543.3.
(Source: P.A. 77-305.)
(215 ILCS 5/543.1) (from Ch. 73, par. 1065.93-1)
Sec. 543.1. 
		
		The Director shall serve a copy of the complaint seeking an
Order of Liquidation with a finding of insolvency against a domestic member
company on the Fund at the same time that such complaint is filed with the circuit court
or shall forward to the Fund notice of the filing of such a complaint
against a foreign or alien member company promptly upon receipt thereof.
The Director also shall serve on the Fund a copy of an Order of
Liquidation with a finding of insolvency against a domestic member company
immediately after it is entered by the circuit court or shall forward to
the Fund a copy of such order against a foreign or alien member company
promptly upon receipt thereof.
(Source: P.A. 85-576.)
(215 ILCS 5/543.2) (from Ch. 73, par. 1065.93-2)
Sec. 543.2. 
		
		The Director shall, upon request of the board of directors, provide the
Fund with a statement of the net direct written premiums of each member
company for the preceding calendar year for which annual statements have
been filed with the Director.
(Source: P.A. 77-305.)
(215 ILCS 5/543.3) (from Ch. 73, par. 1065.93-3)
Sec. 543.3. 
		
		The liquidator of an insolvent company shall notify the
policyholders of the insolvent company who are residents
of this State of the entry of an Order of Liquidation against the company
and of their rights under this
Article. Such notification shall be mailed to the last known
address of such policyholders,
where available, but if sufficient information for notification by mail is
not available, notice by publication in a newspaper of general circulation
shall be sufficient.  If the insolvent company is domiciled in another
state and the liquidator fails to give notice which satisfies the purposes
of this Section, such notice shall be given by the Director as ancillary
receiver or if the insolvent company is domiciled in another state and there
is no ancillary receiver in this State, the Fund shall give such notice
provided the necessary information is made available to the Fund by the liquidator.
The form of the notice given by the Director as either liquidator or ancillary
receiver shall be submitted to the Fund for its approval prior to mailing
or publication.
(Source: P.A. 85-576.)
(215 ILCS 5/544) (from Ch. 73, par. 1065.94)
Sec. 544. 
		Powers of the Director. 
		The Director shall either (a) suspend or revoke, after notice
and hearing pursuant to Sections 401, 402 and 403 of this Code, the
certificate of authority to do business in this State of any member company
which fails to pay an assessment when due or fails to comply with the plan
of operation, or (b) levy a fine on any member
company which fails to pay an assessment when due. Such fine shall not
exceed 5% per month of the unpaid assessment, except that no fine shall be
less than $200 per month.
(Source: P.A. 93-32, eff. 7-1-03.)
(215 ILCS 5/545) (from Ch. 73, par. 1065.95)
Sec. 545. Effect of paid claims.
(a) Every insured or claimant seeking the
protection of this Article shall cooperate with the Fund to the same
extent as such person would have been required to cooperate with the
insolvent company. The Fund shall have all the rights, duties and
obligations under the policy to the extent of the covered claim payment,
provided the Fund shall have no cause of action against the
insured of the insolvent company for any sums it has paid out except
such causes of action as the insolvent company would have had if such
sums had been paid by the insolvent company and except as provided in
subsection (d) of this Section. Any person recovering under this Article and any insured whose liabilities are satisfied under this Article shall be deemed to have assigned the person's or insured's rights under the policy to the Fund to the extent of his or her recovery or satisfaction obtained from the Fund's payments.
(b) The Fund and any similar organization in another state shall be
recognized as claimants in the liquidation of an insolvent company for any
amounts paid by them on covered claims obligations as determined under this
Article or similar laws in other states and shall receive dividends at the
priority set forth in paragraph (d) of subsection (1) of Section
205 of this
Code; provided that if, at the time that the liquidator issues a cut-off notice to the Fund in anticipation of closing the estate, a reserve has been established by the Fund, or any similar organization in another state, for the amount of their future administrative expenses and loss development associated with unpaid reported pending claims, these reserves will be deemed to have been paid as of the date of the notice and payment shall be made accordingly.
 The liquidator of an insolvent company shall be bound by
determinations of covered claim eligibility under the Act and by settlements
of claims made by
the Fund or a similar organization in
another state on the receipt of certification of such payments, to the extent
those
determinations or settlements satisfy obligations of the Fund, but the receiver
shall not be bound in any way by those determinations or settlements to the
extent that there remains a claim in the estate for amounts in excess of the
payments by the Fund.
In submitting their claim for covered claim payments the Fund and any
similar organization in another state shall not be subject to the
requirements of Sections 208 and 209 of this Code and shall not be affected
by the failure of the person receiving a covered claim payment to file a proof
of claim.
(c) The expenses of the Fund and of any similar
organization in any other state, other than expenses incurred in the
performance of
duties under Section 547 or similar duties under the
statute governing a similar organization in another state, shall
be accorded priority over all claims
against the estate, except as provided for in paragraph (a) of subsection (1) of
Section 205 of this Code.  The liquidator shall make prompt reimbursement
to the Fund and any similar organization for such expense payments.
(d) The Fund has the right to recover from the following persons the amount
of any covered claims (as determined without regard to the exemption in paragraph (iv) of subsection (b) of Section 534.3) and allocated claims expenses which the Fund paid or
incurred on behalf of such person in satisfaction, in whole or in part, of
liability obligations of such person to any other person:
(i) any insured whose net worth on December 31 of the     year next preceding the date the company becomes an insolvent company exceeds $25,000,000; provided that an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its affiliates as calculated on a consolidated basis.
(ii) any insured who is an affiliate of the insolvent     company.
The Fund may also, at its sole discretion and without assumption of any ongoing duty to do so, pay any workers compensation claims or any other third-party claims or any cybersecurity insurance obligations covered by a policy of an insolvent company on behalf of a high net worth insured as defined in paragraph (iv) of subsection (b) of Section 534.3. In that case, the Fund shall recover from the high net worth insured under this Section for all amounts paid on its behalf, all allocated claim adjusted expenses related to such claims, the Fund's attorney's fees, and all court costs in any action necessary to collect the full amount to the Fund's reimbursement under this Section.
(Source: P.A. 103-113, eff. 6-30-23.)
(215 ILCS 5/546) (from Ch. 73, par. 1065.96)
Sec. 546. Other insurance.
(a) An insured or claimant shall be required first to exhaust all
coverage provided by any other insurance policy, regardless of whether or not
such other insurance policy was written by a member company, if the claim under
such other policy arises from the same facts, injury, or loss that gave rise to
the covered claim against the Fund.  The Fund's obligation under Section 537.2
shall be reduced by the amount recovered or recoverable, whichever is greater,
under such other insurance policy.  Where such other insurance policy provides
uninsured
or underinsured motorist coverage, the amount recoverable shall be deemed to be
the full applicable limits of such coverage.  To the extent that the Fund's
obligation under Section 537.2 is reduced by application of this Section, the
liability of the person insured by the insolvent insurer's policy for the claim
shall be reduced in the same amount. If the Fund pays a covered claim without the exhaustion of all other coverage that could have been exhausted under this Section, the Fund shall have an independent right of recovery against each insurer whose coverage was not exhausted in the amount the Fund would not have had to pay if that insurer's coverage had been exhausted first.
(b) Any insured or claimant having a claim which may be recovered under more
than one insurance guaranty fund or its equivalent shall seek recovery
first from the Fund of the place of residence of the insured except that
if it is a first party claim for damage to property with a permanent
location, he shall first seek recovery from the Fund of the location of
the property; if it is a workers' compensation claim, he shall first
seek recovery from the Fund of the residence of the claimant. Any
recovery under this Article shall be reduced by the amount of the
recovery from any other insurance guaranty fund or its equivalent.
(Source: P.A. 99-387, eff. 8-17-15.)
(215 ILCS 5/547) (from Ch. 73, par. 1065.97)
Sec. 547. Prevention of insolvencies. To aid in the detection and prevention of company insolvencies:
(a) The board of directors may, upon majority vote,     make recommendations to the Director on matters pertaining to regulation for solvency.
(b) The board of directors may prepare a report on     the history and causes of any company insolvency in which the Fund was obligated to pay covered claims, based on the information available to the Fund, and submit such report to the Director.
(c) The Director may disclose to the Fund the     information described in subsection (g) of Section 132.5 as well as the information described in subsection (c) of Section 131.22, and the Fund may use that information to prepare for the possible liquidation of a member company subject to the requirements and restrictions set forth in Section 132.5. (Source: P.A. 102-929, eff. 5-27-22.)
(215 ILCS 5/548) (from Ch. 73, par. 1065.98)
Sec. 548. Examination of the Fund. The Fund shall be subject to examination and regulation by the Director.
The board of directors shall, not later than April 30 of each year, submit
a financial report for the preceding calendar year in a form approved by
the Director.
(Source: P.A. 99-388, eff. 1-1-16.)
(215 ILCS 5/549) (from Ch. 73, par. 1065.99)
Sec. 549. 
		
		Tax
exemption.
The Fund shall be exempt from payment of all fees and all taxes levied
by this State or any of its subdivisions.
(Source: P.A. 77-305.)
(215 ILCS 5/550) (from Ch. 73, par. 1065.100)
Sec. 550. 
		Immunity.
There shall be no liability on the part of and no cause of action of any
nature shall arise against any member company, the Fund or their agents or
employees, the board of directors, or the Director or his representatives
for any action taken or omitted by them in the performance of their powers
and duties under this Article.
(Source: P.A. 77-305.)
(215 ILCS 5/551) (from Ch. 73, par. 1065.101)
Sec. 551. 
		Stay of proceedings. 
		All proceedings arising out of a claim under a policy of insurance written by
an insolvent company shall be stayed for 120 days from the date of the entry of
the Order of Liquidation to permit proper defense by the Fund of all such
pending causes of action.
(Source: P.A. 92-77, eff. 7-12-01.)
(215 ILCS 5/552) (from Ch. 73, par. 1065.102)
Sec. 552. 
		
		All provisions of this Article shall be interpreted in
accordance with and pursuant to those Sections of Article XIII of this Code
which may be applicable.
(Source: P.A. 85-576.)
(215 ILCS 5/553) (from Ch. 73, par. 1065.103)
Sec. 553. 
		Severability.
If any provision of this Article or the application thereof to any
claimant, company or circumstance is held invalid, such invalidity does not
affect other provisions or applications of this Article which can be given
effect without the invalid application or provision, and to this end the
provisions of this Article are declared to be severable.
(Source: P.A. 77-305.)