§ 141.2 — Grounds for disapproval

Illinois § 141.2

• Jurisdiction: Illinois
• Topic: REGULATION
• Ch. 215: INSURANCE
• Act 215 ILCS 5/: Illinois Insurance Code.
• Art.: Article IX - Provisions Applicable To All Companies

Text

The Director must disapprove any such management contract or service agreement if, at any time, he finds: (1) that the service or management charges are based upon criteria unrelated either to the managed company's profits or to the reasonable customary and usual charges for such services or are based on factors unrelated to the value of such services to the company; or (2) that management personnel or other employees of the insurance company are to be performing management functions and receiving any remuneration therefor through the management or service contract in addition to the compensation by way of salary received directly from the insurance company for their services; or (3) that the contract would transfer substantial control of the company or any of the powers vested in the board of directors, by statute, articles of incorporation or by-laws, or substantially all of the basic functions of the insurance company management; or (4) that the contract contains provisions which would be clearly detrimental to the best interests of policyholders, stockholders or members of the company; or (5) that the officers and directors of the management firm are of known bad character or have been affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance. If the Director disapproves of any management contract or service agreement, notice of such action shall be given to the company assigning the reasons therefor in writing. The Director shall grant any party to the contract a hearing upon request according to Article XXIV of this Code.

Legislative History

(Source: P.A. 77-1040.)