2023 Illinois Compiled Statutes › Chapter 215 - INSURANCE › 215 ILCS 5/ - Illinois Insurance Code. › Article XLI - Risk Retention Arrangements For Banking Associations

(215 ILCS 5/Art. XLI heading)
ARTICLE XLI.  
		RISK RETENTION ARRANGEMENTS FOR
BANKING ASSOCIATIONS
(215 ILCS 5/1101) (from Ch. 73, par. 1065.801)
Sec. 1101. 
		Scope of Article. 
		This Article applies only to trusts
sponsored by domestic banking associations and organized under this
Article to provide casualty insurance authorized under Section 5 of the
Illinois Banking Act, as now or hereafter amended, for
association member banks.
(Source: P.A. 84-1431.)
(215 ILCS 5/1102) (from Ch. 73, par. 1065.802)
Sec. 1102. 
		Definitions. 
		As used in this Article, the following terms
have the following meanings:
(1) "Banking association" means any Illinois corporation, whether
for-profit or not-for-profit, which functions as a professional or trade
association of dues-paying member commercial banks.  For purposes of this
Article, "banking association" does not include any corporation which
directly or indirectly (a) accepts deposits which the depositor has a right
to withdraw on demand by check or negotiable order, or (b) engages in the
business of making loans, or both.
(2) "Trust sponsor" means a banking association which has created a risk
retention trust under this Article.
(3) "Pool retention fund" means a separate fund maintained for
payment of first dollar claims, up to a specific amount per claim
("specific retention") and up to an aggregate amount for a 12-month period
("aggregate retention").
(4) "Contingency reserve fund" means a separate fund maintained for
payment of claims in excess of the pool retention fund amount.
(5) "Coverage grant" means the document describing specific
coverages and terms of coverage which are provided by a risk retention trust
created under this Article.
(6) "Licensed service company" means an entity licensed under Section
464a of the Illinois Insurance Code to perform claims adjusting, loss
control and data processing.
(Source: P.A. 84-1431.)
(215 ILCS 5/1103) (from Ch. 73, par. 1065.803)
Sec. 1103. 
		Name. 
		The corporate name of any trust organized under this
Article shall not be the same as or deceptively similar to the name of any
domestic insurance company or of any foreign or alien insurance company
authorized to transact business in this State.
(Source: P.A. 84-1431.)
(215 ILCS 5/1104) (from Ch. 73, par. 1065.804)
Sec. 1104. 
		Principal Office and Place of Business. 
		The principal
office of any trust organized under this Article shall be located in this State.
(Source: P.A. 84-1431.)
(215 ILCS 5/1105) (from Ch. 73, par. 1065.805)
Sec. 1105. 
		Risk Retention Trust. 
		(1) Any banking association which has
been in existence for a period of not less than 2 years may create a risk
retention trust for the pooling of risks in order to provide
casualty coverage authorized under Section 5 of the Illinois Banking Act,
as now or hereafter amended, for its member banks.  Such trust
shall be administered by at least 3 trustees who are appointed by the trust
sponsor and who represent association member banks which have agreed in
writing to participate in the trust.
(2) The trustees shall appoint a qualified administrator who shall
administer the affairs of the risk retention trust.
(3) The trustees shall retain a licensed service company to perform
claims adjusting, loss control and data processing.
(4) The trust sponsor, the trustees and the trust administrator shall be
fiduciaries of the trust.
(5) Any trust created under this Article shall be consummated by a
written trust agreement and shall be subject to the laws of this State
governing the creation and operation of trusts, to the extent not
inconsistent with this Article.
(Source: P.A. 84-1431.)
(215 ILCS 5/1106) (from Ch. 73, par. 1065.806)
Sec. 1106. 
		Trust - Participation. 
		(1) A banking association and its member banks
may participate in any trust created under this Article if it:
(a) Meets the underwriting standards for acceptance into the trust;
(b) Files a written application for coverage, agreeing to meet
all of the membership conditions of the trust;
(c) Is a member of the association sponsoring the trust;
(d) Agrees to meet the ongoing loss control provisions and risk pooling
arrangements set forth by the
trustees;
(e) Pays its premium contribution on a timely basis as required; and
(f) Pays its predetermined annual required contribution into the
contingency reserve fund.
(2) Any bank accepted for trust membership and participating in the
trust under this Article shall be liable for payment to the trust
of the amount of its annual premium contribution and its annual
predetermined contingency reserve fund contribution.
(Source: P.A. 84-1431.)
(215 ILCS 5/1107) (from Ch. 73, par. 1065.807)
Sec. 1107. 
		Trust - Coverage Grants - Payment of Claims. 
		(1) No risk
retention trust created under this Article may issue coverage grants until
it has procured 100 bonafide applications for coverage with the first
premium contribution in cash for each kind of coverage which the trust
undertakes to write, and has a contingency reserve fund of at least
$2,500,000.  Every trust subject to this Article must have, and at all times
maintain a pool retention fund at least equal to its unpaid liabilities and
an unimpaired minimum contingency reserve fund of $1,500,000.
The contingency reserve fund requirements shall be deemed satisfied if
the required contribution into such fund by any participating member bank
is obtained by a certificate of deposit redeemable by the trust in an
amount not greater than the amount insured by the Federal Deposit Insurance Corporation.
(2) Every coverage grant issued or delivered in this State by any trust
subject to this Article shall provide for the liability of trust
members to the extent that funds are needed to pay a member's share of the
depleted contingency reserve fund needed to maintain the reserves required
by this Section.
(3) The Director may after notice and hearing suspend or revoke the
license of any trust that
fails to maintain the minimum reserves required by this Section.
(4) All claims shall first be paid from the pool retention fund.
 If that fund becomes depleted, any additional claims shall be paid from
the contingency reserve fund.
(5) On the basis of an annual independent certified audit,
the Director may require the risk retention trust to purchase insurance in amounts
required to provide additional protection to member banks in excess of the
contingency reserve fund.
(Source: P.A. 84-1431.)
(215 ILCS 5/1108) (from Ch. 73, par. 1065.808)
Sec. 1108. 
		Trust; filing requirements; records.
(1) Any risk
retention trust
created under this Article shall file with the Director:
(a) A statement of intent to provide named coverages.
(b) The trust agreement between the trust sponsor and     the trustees, detailing the organization and administration of the trust and fiduciary responsibilities.
(c) Signed risk pooling agreements from each trust     member describing their intent to participate in the trust and maintain the contingency reserve fund.
(d) By April 1 of each year a financial statement for     the preceding calendar year ending December 31, and a list of all beneficiaries during the year.  The financial statement and report shall be in such form as the Director of Insurance may prescribe.  The truth and accuracy of the financial statement shall be attested to by each trustee.  Each Risk Retention Trust shall file with the Director by June 1 an opinion of an independent certified public accountant on the financial condition of the Risk Retention Trust for the most recent calendar year and the results of its operations, changes in financial position and changes in capital and surplus for the year then ended in conformity with accounting practices permitted or prescribed by the Illinois Department of Insurance.
(e) The name of a bank or trust company with whom the     trust will enter into an escrow agreement which shall state that the contingency reserve fund will be maintained at the levels prescribed in this Article.
(f) Copies of coverage grants it will issue.
(2) The Director of Insurance shall charge, collect and give proper
acquittances for the payment of the following fees and charges:
(a) For filing trust instruments, amendments thereto     and financial statement and report of the trustees, $50.
(b) For copies of papers or records per page, $2.
(c) For certificate to copy of paper, $10.
(d) For filing an application for the licensing of a     risk retention trust, $1,000.
(3) The trust shall keep its books and records in accordance with the
provisions of Section 133 of this Code.  The Director may examine such
books and records from time to time as provided in Sections 132
 through 132.7 of this Code
and may charge the expense of such examination to the trust as provided in
subsection (3) of Section 408 of this Code.
(4) Trust funds established under this Section and all persons
interest therein or dealing therewith shall be subject to the provisions of
Sections 133, 144.1, 149, 401, 401.1, 402, 403, 403A, 412, and all of the
provisions of Articles VII, VIII, XII 1/2 and XIII of the Code, as amended.
Except as otherwise provided in this Section, trust funds established
under and which fully comply with this Section, shall not be subjected to
any other provision of the Code.
(5) The Director of Insurance may make reasonable rules and regulations
pertaining to the standards of coverage and administration of the trust
authorized by this Section.  Such rules may include but need not be limited
to reasonable standards
for fiduciary duties of the trustees, standards for the investment of
funds, limitation of risks assumed, minimum size, capital, surplus,
reserves, and contingency reserves.
(Source: P.A. 93-32, eff. 7-1-03.)
(215 ILCS 5/1109) (from Ch. 73, par. 1065.809)
Sec. 1109. 
		Illinois Insurance Guaranty Fund - Inapplicability. 
		The
provisions of Article XXXIV of this Code shall not apply to any risk
retention trust created under this Article.
(Source: P.A. 84-1431.)