A. A pure captive insurance company shall be incorporated as a stock insurer with its capital divided into shares and held by the stockholders. B. An association captive insurance company or an industrial insured captive insurance company may be incorporated:
Terms Used In Illinois Compiled Statutes 215 ILCS 5/123C-5
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Association: means any entity meeting the requirements set forth in either of the following paragraphs (1), (2) or (3): (1) any organized association of individuals, legal
representatives, corporations (whether for profit or not for profit), partnerships, trusts, associations, units of government or other organizations, or any combination of the foregoing, that has been in continuous existence for at least one year, the member organizations of which collectively:
(a) own, control, or hold with power to vote
(directly or indirectly) all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; or
(b) have complete voting control (directly or
indirectly) over an association captive insurance company organized as a mutual insurer;
(2) any organized association of individuals, legal
representatives, corporations (whether for profit or not for profit), partnerships, trusts, associations, units of government or other organizations, or any combination of the foregoing:
(a) whose member organizations are engaged in
businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and
(b) whose member organizations: (i) directly or indirectly own or control,
and hold with power to vote, at least 80% of all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; or
(ii) directly or indirectly have at least 80%
of the voting control over an association captive insurance company organized as a mutual insurer; or
(3) any risk retention group, as defined in
subsection (11) of Section 123B-2, domiciled in this State and organized under this Article; however, beginning 6 months after the effective date of this amendatory Act of 1995, a risk retention group shall no longer qualify as an association under this Article. See Illinois Compiled Statutes 215 ILCS 5/123C-1
Captive insurance company: means any pure captive insurance company, association captive insurance company or industrial insured captive insurance company organized under the provisions of this Article. See Illinois Compiled Statutes 215 ILCS 5/123C-1
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Industrial insured: means an insured which (together with its affiliates) at the time of its initial procurement of insurance from an industrial insured captive insurance company: (1) has available to it advice with respect to the
purchase of insurance through the use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant; and
(2) pays aggregate annual premiums in excess of
$100,000 for insurance on all risks except for life, accident and health; and
(3) either (i) has at least 25 full-time employees,
Industrial insured captive insurance company: means any company that insures risks of industrial insureds that are members of the industrial insured group, and their affiliated companies. See Illinois Compiled Statutes 215 ILCS 5/123C-1
State: when applied to different parts of the United States, may be construed to include the District of Columbia and the several territories, and the words "United States" may be construed to include the said district and territories. See Illinois Compiled Statutes 5 ILCS 70/1.14
(1) as a stock insurer with its capital divided into
shares and held by the stockholders; or
(2) as a mutual insurer without capital stock, the
governing body of which is elected by the member organizations of its association.
C. No stock captive insurance company shall issue any shares of stock having a par value of less than $1 per share. The capital stock of a captive insurance company incorporated as a stock insurer shall be issued at not less than par value. D. The provisions of subsection (1) of Section 10, subsection (1) of Section 12, Sections 14, 14.1, 15 (excluding subsections (d) and (e) thereof), 18, 19, 20 and 21, subsections (3) and (4) of Section 23, and Section 25 shall apply to the organization of a stock captive insurance company. E. The provisions of subsection (1) of Section 40, subsections (1) and (2) of Section 42, Section 44, subsection (a) and (b) of Section 45, and Sections 48, 49, 50 and 52 shall apply to the organization of a mutual captive insurance company. F. (1) In order to receive a certificate of authority, at the same time as the documents referred to in subsections (a), (b) and (c) of Section 15 (in the case of a stock captive insurance company) or subsections (a) and (b) of Section 45 (in the case of a mutual captive insurance company) are delivered to the Director, the incorporators shall file with the Director any statements or documents required by the Director, including evidence of the following: (a) the amount and liquidity of its assets relative
to the risks to be assumed;
(b) the expertise, experience, character, financial
responsibility, reputation and business qualifications of the officers, directors and persons who will manage it;
(c) the overall soundness of its plan of operation
(which shall include (i) the lines of business to be written by the captive insurance company, (ii) the geographic areas in which the captive insurance company is to operate, (iii) the type of policy (occurrence or claims-made) to be offered by the captive insurance company, (iv) the net retention limits and reinsurance program, including whether the captive insurance company intends to assume reinsurance, and (v) in the case of an industrial insured captive insurance company, an investment policy specifying the type of investments to be made by such company and the diversity of such investments);
(d) whether major operations functions, such as
underwriting, rating, claims administration, loss prevention programs, accounting and investment of funds, will be handled by the captive insurance company’s employees or through contractual arrangements with other parties;
(e) the scope of the loss prevention programs of its
parent, member organizations, or industrial insureds, as applicable; and
(f) such other factors deemed relevant by the
Director in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
The Director may deny the incorporators’ application for a certificate of authority if he determines, in the exercise of his discretion, either that the foregoing standards have not been satisfied or that the proposed captive insurance company is being organized for purposes inimical to the interests of policyholders. (2) If the Director is satisfied, on the basis of the documents and statements referred to in paragraph (1) of subsection F, that the captive insurance company meets the criteria set forth in paragraph (1) of subsection F, and that the captive insurance company meets all other requirements imposed by this Article (other than those set forth in Sections 123C-3 and 123C-4), he shall, at the same time as he effects the filing referred to in Section 18 (or, in the case of a mutual insurance company, Section 48) and issues the permit referred to in Section 20 (or, in the case of a mutual insurance company, Section 50), notify the captive insurance company in writing of his determination, which notification shall state that the Director will issue a certificate of authority upon receipt of evidence satisfactory to the Director that the company has fully collected the capital and surplus required by Sections 123C-3 and 123C-4. Upon receipt of evidence satisfactory to the Director that the required capital and surplus have been fully collected by the company, the Director shall grant a certificate of authority authorizing the captive insurance company to transact the kind or kinds of business specified therein.
