(Section scheduled to be repealed on January 1, 2057) Sec. 123B-11. Duty on producers to obtain license.
A.Any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service a liability insurance contract between a purchasing group located in this State and a risk retention group or insurance company, and any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service membership contracts, certificates or agreements for enrollment in any purchasing group to any resident of this State, must obtain a license to act as an insurance producer for casualty lines of insurance under Article XXXI; provided, however, that the foregoing provisions of this subsection A, and the following provisions of this Section 123B-11, shall not a
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(Section scheduled to be repealed on January 1, 2057) Sec. 123B-11. Duty on producers to obtain license. A. Any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service a liability insurance contract between a purchasing group located in this State and a risk retention group or insurance company, and any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service membership contracts, certificates or agreements for enrollment in any purchasing group to any resident of this State, must obtain a license to act as an insurance producer for casualty lines of insurance under Article XXXI; provided, however, that the foregoing provisions of this subsection A, and the following provisions of this Section 123B-11, shall not apply, if: (1) such purchasing group is composed entirely of industrial insureds (as defined in subsection F of Section 123C-1); (2) any such purchasing group, that obtains liability insurance from an insurer or risk retention group for one or more members of such group which has risks resident or located in this State, shall file a report in writing with the Director not later than April 1 of each year, in the form prescribed by the Director, signed and sworn to by an officer of such group, setting forth such information as the Director may require to determine whether taxes due this State with respect to the purchase of such insurance have properly been paid; and (3) such purchasing group filing a report under paragraph (2) shall furnish to each insurer or risk retention group whose name is set forth in such report a written statement, showing: (a) the name and address of the purchasing group making such report; (b) such additional information as the Director may require with respect to the liability insurance obtained by such purchasing group from such insurer or risk retention group; and (c) that such information has been filed with the Director. The written statement required under the preceding sentence shall be furnished in a separate mailing by first-class mail to the insurer or risk retention group on or before April 1 of the year following the calendar year for which the report under paragraph (2) was made and shall be in such form as the Director may prescribe. B. Any such person shall be subject to all requirements of and regulations under Article XXXI, except that: (1) such person shall be exempt from any residency requirement imposed by statute or rule, if he or she states in writing that the activities to be carried out under the license will be limited to those described in subsection A of this Section; and (2) where such person does not qualify for the exemption set forth in paragraph (1) of subsection B of this Section, all residency requirements under the laws of this State shall be applicable; and (3) where such person engages in activities, as a licensed insurance producer, beyond those described in subsection A of this Section, all books, records, statements and accounts required to be established and maintained with respect to activities described in subsection A shall be established and maintained on a segregated basis, separate and apart from all other books, records, statements and accounts regarding the licensee's other transactions. All premiums, commissions or other funds collected as a result of the activities described in subsection A shall be segregated from all other funds of the licensee, shall be held in separate accounts and shall in no event be commingled with any other funds held by the licensee; and (4) in addition to any other statutory bonding requirements, any person required to be licensed by this Section shall file with his license application, and thereafter maintain, a fidelity bond in favor of the people of this State executed by a surety company and payable to any party injured by the licensee's breach of a fiduciary duty under the terms of the bond. Such bond shall be continuous in form and maintained in the amount of the greater of $50,000 or 5% of premiums or contributions projected to be received or collected by the applicant from Illinois residents during the next succeeding year as a result of activities under this Section, but not to exceed $1,000,000. Such bond shall remain in force and effect until the surety is released from liability by the Director or until the bond is cancelled by the surety. The surety may cancel the bond and be released from further liability thereunder upon 30 days' written notice in advance to the Director. Such cancellation shall not affect any liability incurred or accrued thereunder before the termination of the 30 day period. Upon receipt of any notice of cancellation, the Director shall immediately notify the licensee. C. Activities described under subsection A of this Section shall require licensing if carried out, in whole or in part, within this State either directly or indirectly by the use of the mails, advertising or other means of communication with a terminal located in this State. D. In addition to any other lawful duties, any person engaging in the activities described in subsection A of this Section shall be obligated to exercise reasonable and customary skill and diligence to ascertain that: (1) any purchasing group or purchasing group member, to or for whom an offer or solicitation is made, receives a written disclosure that the liability insurance coverage being offered may not be subject to all of the insurance laws and regulations of this State and that, if such company is not otherwise authorized to transact business in this State, insolvency guaranty fund protection is not available for the purchasing group or purchasing group members; and that (2) any risk retention group or insurance company which provides a liability insurance policy or certificate to any purchasing group member to or for whom an offer or solicitation is made is: (a) solvent, and has standards of solvency and management which are adequate for the protection of policyholders and certificate holders; and (b) operating in a lawful manner under this Article. E. Any insurance producer who breaches a fiduciary duty or who violates any provision of this Section will be subject to fine and revocation or suspension of its license in accordance with the procedures established under Article XXXI and may be held liable for civil damages to any person or group resulting from such violation or breach of a fiduciary duty. F. Any person retained or employed to solicit, offer, sell or purchase memberships in a purchasing group may be ordered to cease any such enrollment activity in this State whenever the Director has reason to believe that any such purchasing group has liability insurance coverage from a risk retention group or insurance company which is insolvent or in a hazardous financial condition. Orders entered under this paragraph shall be issued in accordance with the procedures set forth at Section 401.1. G. The Director may permit, on a reciprocal basis, a person licensed in another state to engage in the activities described in subsection A of this Section, whenever he is satisfied that the laws of such other state impose standards and duties on such licensee no less stringent than the standards and duties required by this Section.