Prior Notification of Transactions – Required Information

Section 854 Section 654.30  Prior Notification of Transactions – Required Information a)         Any domestic company required, pursuant to Section 131.20a(1) of the Code, to notify the Director of a transaction between it and any person in its holding company system shall notify the Director of the transaction in writing at least 30 days prior to entering into the transaction.  The notice shall be deemed incomplete unless it includes all the information required by this Part. b)         The Director shall, within 30 days after receipt of a complete notice, disapprove the transactions if the standards contained in Section 131.20 of the Code have not been met. c)         Transactions Subject to Prior Notice – Notice Filing 1)         An insurer required to give notice of a proposed transaction pursuant to Section 131.20a(1) of the Code shall furnish the required information on Form D-1. 2)         Agreements for cost sharing services and management services shall, at a minimum and as applicable: A)        Identify the person providing services and the nature of those services; B)        Set forth the methods to allocate costs; C)        Require timely settlement, not less frequently than on a quarterly basis, and compliance with the 2024 edition of the NAIC Accounting Practices and Procedures Manual (available at https://www.naic.org/prod_serv_alpha_listing.htm; this incorporation by reference does not include any subsequent editions or amendments); D)        Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement; E)        State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance; F)         Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement that are otherwise the property of the insurer, in whatever form maintained, including, but not limited to, claims and claims files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records or similar records within the possession, custody or control of the affiliate; G)        Specify that all books and records of the insurer are and remain the property of the insurer, and: i)          Are subject to control of the insurer; ii)         Are identifiable; and iii)        Are segregated from all other persons' records and data or are readily capable of segregation at no additional cost to the insurer; H)        State that all funds and invested assets of the insurer are the exclusive property of the insurer, are held for the benefit of the insurer, and are subject to the control of the insurer; I)         Include standards for termination of the agreement, with and without cause; J)         Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services and for any actions by the affiliate that violate provisions of the agreement required in subsections 654.30(c)(2)(K) through (O) ; K)        Specify that, if the insurer is placed in rehabilitation, liquidation, conservation, dissolution, receivership or seized by the Director under Article XIII of the Code: i)          All of the rights of the insurer under the agreement extend to the receiver or Director to the extent permitted by Illinois law; ii)         All books and records of the insurer shall be identifiable and segregated from all other persons' books and records or readily capable of segregation at no additional cost to the receiver or the Director; iii)        A complete set of all books and records of the insurer will immediately be made available to the receiver or the Director in a usable format, and shall be turned over to the receiver or the Director immediately upon the receiver's or the Director's request, and the cost to transfer data to the receiver or the Director shall be fair and reasonable; and, iv)        The affiliated persons will make available all employees essential to the operations of the insurer and the services associated therewith for the immediate continued performance of the essential services ordered or directed by the receiver or the Director; L)        Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in rehabilitation, liquidation, conservation, dissolution, receivership or seized pursuant to Article XIII of the Code; and M)       Specify that the affiliate will provide the essential services for a minimum period of time after termination of the agreement, if the insurer is placed in rehabilitation, liquidation, conservation, dissolution, receivership or seized pursuant to Article XIII of the Code, as ordered or directed by the receiver or the Director.  Performance of the essential services will continue to be provided without regard to pre-receivership unpaid fees, so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, the Director or supervising court; N)        Specify that the affiliate will continue to maintain any systems, programs or other infrastructure, notwithstanding supervision, seizure, conservatorship or receivership pursuant to Article XIII of the Code, and will make them available to the receiver or the Director as ordered or directed by the receiver or the Director for so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, the Director or supervising court; and O)        Specify that, in furtherance of the cooperation between the receiver and the affected guaranty associations and subject to the receiver's authority over the insurer, if the insurer is placed in rehabilitation, liquidation, conservation, dissolution, receivership or seized pursuant to Article XIII of the Code, and portions of the insurer's policies or contracts are eligible for coverage by one or more guaranty associations, then the affiliate's commitments under subsections 654.30(c)(2)(K) through (N) will extend to such guaranty associations.