The end of summer and the beginning of fall is usually a sleepy time for insurance regulation. This year, however, a series of bill signings by Illinois Governor JB Pritzker on the same day merit the attention of insurance industry insiders. Here is a roundup of a number of important items insurance professionals working with companies doing business in Illinois should be aware of:
Illinois Moves to Modernize Auto Lien and Title System
Auto insurers in Illinois are painfully aware of the problems of Illinois’ archaic paper-based system for recording auto liens and titles. The current system is slow and can be riddled with human-created errors, as the Illinois Secretary of State’s office is burdened with processing an estimated 3,500,000 title transactions annually, per its own figures. Help is on the way, however, as on August 23, 2019, Governor Pritzker signed into law Public Act 101-0490, which requires that an electronic lien and title transfer system will be implemented by the Secretary of State’s office by no later than July 1, 2021. Once the new system is ready, it should benefit insurers by providing them more timely and accurate information on vehicle ownership for their insureds and applicants. The new law should also speed the process of transferring ownership of vehicles involved in total loss claims. The Act passed both houses of the General Assembly unanimously, and should be welcome news for both claims and underwriting staff at Illinois auto carriers.
Illinois Officially Welcomes Blockchain Technology
On the same day, Governor Pritzker signed the Illinois Blockchain Technology Act, Public Act 101-0514. The Act codifies support for the enforceability of smart contracts and places limitations on their use. Significantly, it also prohibits local governments from impeding the use of blockchain technology or taxing its use.
The Act provides welcome assurances to companies utilizing blockchain technology that their contracts will be honored and enforceable under Illinois law. However, at least one limitation is of particular note to insurers. Specifically, requirements under Illinois law for written notice or acknowledgment of the cancellation or termination of a health insurance policy, for benefits received under such a policy, or for benefits received under a life insurance policy (excluding annuities) will not be satisfied by the use of a blockchain. The Act takes effect on January 1, 2020.
It remains to be seen whether any of the provisions of this Act may be federally pre-empted by ESIGN (The Electronic Signatures in Global and National Commerce Act), as Illinois is one of the three remaining states that has not adopted UETA (The Uniform Electronic Transactions Act) but instead has its own Electronic Commerce Security Act adopted in 1999 (5 ILCS 175/1 et seq.).
Illinois Amends Division Statute
Again on August 23rd, Governor Pritzker signed Public Act 101-0549 into law. This law amends the Illinois Insurance Code section on approvals of plans of division of domestic stock companies (215 ILCS 5/35B-25) to add an additional item to the list of conditions that would permit the Director of Insurance to deny approval of such plans. The newly added condition that would permit denial, 2.5, would be triggered if each new company created by the proposed division, except a new company that is a nonsurviving party to certain mergers, that will be a member of the Illinois Life and Health Insurance Guaranty Association and that will have policy liabilities assigned to it, will not be licensed to do insurance business in each state where such policies were written by the dividing company. This additional provision passed both houses overwhelmingly and takes effect January 1, 2020.
The post Flurry of Late Summer Regulatory Activity Will Affect Illinois Insurers appeared first on Insurance & Reinsurance.
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