(215 ILCS 5/532)(from Ch. 73, par. 1065.82) Sec. 532. Purpose. 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, to avoid financial loss to claimants or policyholders because of the entry of an Order of Liquidation against an insolvent company, and to provide a Fund to assess the cost of such protection among member companies. (Source: P.A. 85‑576.)
(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 as they appear and are defined in those clauses as of January 1, 1985, 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. 89‑97, eff. 7‑7‑95.)
(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 534.8 have the meanings set forth in those Sections. (Source: P.A. 85‑576.)
(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 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; 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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 such policy obligation through merger, 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. 90‑499, eff. 8‑19‑97.)
(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 5/535)(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 9 persons serving terms as established in the plan of operation. 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. 85‑576.)
(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, 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. 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. 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. 92‑77, eff. 7‑12‑01.)
(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. (Source: P.A. 89‑97, eff. 7‑7‑95.)
(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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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, however, if the claim is a covered claim and the settlement or 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. (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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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 Sections 538.1 through 538.8. (Source: P. A. 77‑305.)
(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 and perform other duties of the Fund. (Source: P. A. 77‑305.)
(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. (Source: P. A. 77‑305.)
(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 taking any legal actions necessary or proper for recovery of any unpaid assessments under Sections 537.1 or 537.6. 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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. The Fund may perform such other acts as are necessary or proper to effectuate the purposes of this Article. (Source: P.A. 82‑210.)
(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 5/539)(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 th
(215 ILCS 5/532)(from Ch. 73, par. 1065.82) Sec. 532. Purpose. 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, to avoid financial loss to claimants or policyholders because of the entry of an Order of Liquidation against an insolvent company, and to provide a Fund to assess the cost of such protection among member companies. (Source: P.A. 85‑576.)
(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 as they appear and are defined in those clauses as of January 1, 1985, 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. 89‑97, eff. 7‑7‑95.)
(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 534.8 have the meanings set forth in those Sections. (Source: P.A. 85‑576.)
(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 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; 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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 such policy obligation through merger, 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. 90‑499, eff. 8‑19‑97.)
(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 5/535)(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 9 persons serving terms as established in the plan of operation. 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. 85‑576.)
(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, 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. 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. 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. 92‑77, eff. 7‑12‑01.)
(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. (Source: P.A. 89‑97, eff. 7‑7‑95.)
(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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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, however, if the claim is a covered claim and the settlement or 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. (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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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 Sections 538.1 through 538.8. (Source: P. A. 77‑305.)
(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 and perform other duties of the Fund. (Source: P. A. 77‑305.)
(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. (Source: P. A. 77‑305.)
(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 taking any legal actions necessary or proper for recovery of any unpaid assessments under Sections 537.1 or 537.6. 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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. The Fund may perform such other acts as are necessary or proper to effectuate the purposes of this Article. (Source: P.A. 82‑210.)
(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 5/539)(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 th
(215 ILCS 5/532)(from Ch. 73, par. 1065.82) Sec. 532. Purpose. 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, to avoid financial loss to claimants or policyholders because of the entry of an Order of Liquidation against an insolvent company, and to provide a Fund to assess the cost of such protection among member companies. (Source: P.A. 85‑576.)
(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 as they appear and are defined in those clauses as of January 1, 1985, 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. 89‑97, eff. 7‑7‑95.)
(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 534.8 have the meanings set forth in those Sections. (Source: P.A. 85‑576.)
(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 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; 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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 such policy obligation through merger, 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. 90‑499, eff. 8‑19‑97.)
(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 5/535)(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 9 persons serving terms as established in the plan of operation. 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. 85‑576.)
(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, 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. 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. 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. 92‑77, eff. 7‑12‑01.)
(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. (Source: P.A. 89‑97, eff. 7‑7‑95.)
(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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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, however, if the claim is a covered claim and the settlement or 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. (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. (Source: P.A. 92‑77, eff. 7‑12‑01.)
(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 Sections 538.1 through 538.8. (Source: P. A. 77‑305.)
(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 and perform other duties of the Fund. (Source: P. A. 77‑305.)
(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. (Source: P. A. 77‑305.)
(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 taking any legal actions necessary or proper for recovery of any unpaid assessments under Sections 537.1 or 537.6. 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. 89‑97, eff. 7‑7‑95; 90‑499, eff. 8‑19‑97.)
(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. The Fund may perform such other acts as are necessary or proper to effectuate the purposes of this Article. (Source: P.A. 82‑210.)
(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 5/539)(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 th
