Section 3301.10  Authority

 

This Rule is promulgated by the Director of Insurance pursuant to Section 401 of the Illinois Insurance Code (Ill. Rev. Stat. 1981 ch. 73, para. 1013), which empowers the Director of Insurance "...to make reasonable rules and regulations as may be necessary for making effective..." the insurance and related laws of this State.  The purpose of this Rule is to implement Section 525.1 of the Illinois Insurance Code as amended by P.A. 81-1426, eff. Sept. 3, 1980, (Ill. Rev. Stat. 1981, ch. 73, pars. 1065.72-1).

 

Section 3301.20  Purpose and Scope

 

The purpose of this Part is to establish procedures for determining the net level of participation in the Illinois FAIR Plan (Fair Access to Insurance Requirements) required of each insurer.  This Part shall apply to all insurers engaged in writing in this State, on a direct basis, basic property insurance or any property insurance component in multi-peril policies, other than local district, county and township mutual companies.

 

Section 3301.30  Participation Parameters

 

a)         Gross Participation.

            The gross participation shall apply uniformly to all property insurance and shall be based on the FAIR Plan participation formula which shall be filed with and approved by the Director of Insurance.

 

b)         Credits.

            Credits will be given for 1-4 family building Residential Fire and Homeowners  policies and for Residential Fire and Homeowners policies written on personal contents in any structure.  (Residential Property Insurance).

 

c)         Net Participation.

            Net participation is equal to gross participation adjusted by voluntary credits.  There shall be no maximum applicable to net participation.

 

d)         Market Penetration.

            FAIR Plan market penetration shall be based only on residential building and contents policies.  Residential contents policies will not be considered.

 

e)         Credit Eligible Areas (CEA's)

 

1)         As of the effective date of this Part Credit Eligible Areas will be all zip codes in FAIR Plan eligible areas as designated from time to time by the Illinois Department of Insurance.

 

2)         Beginning in July of 1981 and annually thereafter, the Department of Insurance shall review all Credit Eligible Areas and determine which CEA's have a FAIR Plan market penetration (FAIR Plan policies divided by the total of FAIR Plan policies plus voluntary policies) which is 15% or greater.

 

Section 3301.40  Credit Formula

 

a)         The FAIR Plan shall compute the gross participation for all companies as set forth in their formula filed with and approved by the Director.

 

b)         Beginning with calendar year 1981 and each calendar year thereafter, companies shall report to the FAIR Plan on or before April 1st of the following year residential property insurance written premiums as follows:

 

1)         All premiums written in CEA's during the year for which the immediate previous writer was the FAIR Plan.

 

2)         All premiums written in CEA's where the FAIR Plan's market penetration exceeds 15% as determined in Section 3301.30(e) including new and renewal business as defined in (f) below.

 

c)         Beginning with calendar year 1981 and each calendar year thereafter, the FAIR Plan shall compute residential property insurance written premiums written in CEA's by the FAIR Plan during the calendar year.  Such computation shall be made by April 1st of the subsequent year.

 

d)         Companies shall receive credit on their participation as follows:

 

1)         Credit for CEA voluntary written premiums as reported in (b)(2) above and determined by the FAIR Plan shall be allowed using the formula of 600% of Fire, Allied Lines and Homeowners written premiums so reported.

 

2)         Credit for CEA voluntary written premium as determined in (d)(1) above shall be increased an additional 600% for that portion in which the immediate previous writer was the FAIR Plan.

 

3)         A one time credit of 900% shall be allowed for voluntary written premiums on risks located in a CEA where the immediate past writer was the FAIR Plan and the risk does not otherwise qualify for credit under (d)(2) above.

 

e)         The minimum level of net participation for each company shall be 50% of its  gross participation.

 

f)         Only new policies on risks written on or after January 1, 1981, or renewal policies which were first written by the company claiming the credit on or after January 1, 1981, shall be considered for any credit.  A policy will not be considered a new policy for purposes of claiming a credit if the immediate previous writer was a company affiliated with the new company on the risk.

 

Section 3301.50  Severability Provision

 

If any Section or portion of a Section of this Part or the applicability thereof to any person or circumstances is held invalid by a court, the remainder of the Part or the applicability of such provision to other persons or circumstances shall not be affected thereby.