(215 ILCS 5/Art. XLIV heading)
Article XLIV.
FINANCIAL INSTITUTIONS
INSURANCE SALES LAW
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(215 ILCS 5/1400)
Sec. 1400.
Title.
This Article may be cited as the Financial Institutions
Insurance Sales Law.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1401)
Sec. 1401.
Purpose.
The purpose of this Article is to increase the
availability of insurance products to the citizens of this State by expanding
those businesses authorized to sell insurance products to include financial
institutions, and to protect the interests of the citizens of this State by
regulating their authority to do so. This Article does not apply to activities
or services conducted in this State by or for a financial institution that do
not require
licensure as an insurance producer, temporary
insurance producer, limited insurance representative, or registered firm.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1402)
Sec. 1402.
Definitions.
For the purposes of this Article:
"Financial institution" means:
(1) a State bank, a national bank, or an out-of-state
| | bank, as those terms are defined in the Illinois Banking Act, or any subsidiary of a State bank, a national bank, or an out-of-state bank;
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(2) a foreign banking corporation, as that term is
| | defined in the Foreign Banking Office Act, or any subsidiary of a foreign banking corporation;
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(3) a corporate fiduciary, as that term is defined in
| | the Corporate Fiduciary Act;
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(4) a savings bank organized under the Savings Bank
| | Act, an out-of-state savings bank chartered under the laws of a state other than Illinois, a territory of the United States, or the District of Columbia, or a federal savings bank organized under federal law, or any subsidiary of a savings bank, an out-of-state savings bank or a federal savings bank;
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(5) an association or federal association, as those
| | terms are defined in the Illinois Savings and Loan Act of 1985, or any subsidiary of an association or federal association;
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(6) an out-of-state savings and loan association
| | chartered under the laws of a state other than Illinois, a territory of the United States or the District of Columbia, or a federal savings and loan association organized under federal law whose principal business office is located outside of Illinois, or any subsidiary of an out-of-state savings and loan association or federal savings and loan association whose principal business office is located outside of Illinois; or
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(7) a credit union as defined in the Illinois Credit
| | Union Act, or any subsidiary of a credit union.
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To the extent that any entity other than a financial institution conducts
insurance activities in this State on behalf of or on the premises of the
financial
institution, such entity shall be subject to this Article for the purposes of
those activities.
"Insurance" means all lines of insurance defined and regulated as insurance
under this Code, but for the purposes of this Article, "insurance" shall not
include the following lines of insurance, provided that this paragraph shall
not be deemed to preclude or otherwise limit regulation of the following lines
of insurance pursuant to and to the extent otherwise provided by any other
insurance law of this State:
(1) credit life, credit accident and health, credit
| | involuntary unemployment, credit casualty and credit property insurance;
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(2) extended service contracts and warranty
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(3) insurance obtained by the debtor to provide
| | payment for the difference between the remaining balance on a loan or other extension of credit and the amount of insurance coverage on the collateral securing the loan or other extension of credit;
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(4) insurance placed by a financial institution on
| | collateral used in connection with a loan or other extension of credit when a debtor breaches the contractual obligation to provide that insurance;
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(5) title insurance regulated by the Title Insurance
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(6) private mortgage insurance and financial
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(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1403)
Sec. 1403.
Licensure requirements for financial institutions.
(a) A financial institution transacting insurance business in this State
shall register with the Director pursuant to the Illinois Insurance Code and
shall be subject to the laws, rules, and penalties of the Illinois Insurance
Code.
(b) The solicitation and sale of insurance by a financial institution
shall be conducted only by individuals who have been issued and maintain an
insurance producer's license pursuant to the Illinois Insurance Code and shall
be subject to the laws, rules, and penalties of the Illinois Insurance Code.
(c) For the purposes of this Section, a "financial institution" means the
subsidiary of a financial institution when the financial institution is
transacting insurance business in this State only through the subsidiary. For
the purposes of Section 499.1 of the Illinois Insurance Code, a financial
institution shall be deemed to be a corporation.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1404)
Sec. 1404.
Subsidiaries or divisions.
A financial institution shall not
qualify for registration as a registered firm under Section 499.1 of
this Code unless: (1) it establishes a separate subsidiary that
acts as the registered firm or (2) it is otherwise permitted by law to sell
insurance directly through the financial institution, and it establishes a
separate division within the financial institution to conduct the business of
the registered firm. The subsidiary or division acting as a registered firm
shall maintain records for insurance transactions that are
separate and distinct from the records of the financial institution.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1405)
Sec. 1405.
Extensions of credit.
A financial institution shall not delay
or impede the completion of a loan transaction or other transactions involving
the extension of credit for the purpose of influencing a customer's selection
of any insurance product.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1406)
Sec. 1406.
Insurance and financial institution products.
(a) No financial institution may offer banking products or services, or fix
or vary the consideration of the offer, on a condition or requirement that the
customer obtain insurance from the financial institution or any affiliate of
the financial institution.
(b) A financial institution that offers banking products or services in
conformity with the provisions of Section 106 of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1972) shall be deemed to be in compliance with
the provisions of subsection (a) of this Section.
(c) No financial institution shall require that a customer or prospective
customer of the financial institution purchase an insurance product from any
particular registered firm or insurance producer as a condition for the lending
of money or extension of credit, the establishment or maintenance of a
checking, savings, or other deposit account, or the establishment or
maintenance
of a trust account.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1407)
Sec. 1407.
Rebating and discounting.
(a) No financial institution may offer a rebate on
an insurance product in violation of Section 151 of this
Code.
(b) No financial institution may offer a discount on a loan or extension of
credit for the purpose of inducing the customer to purchase insurance required
in connection with the loan or extension of credit.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1408)
Sec. 1408.
Discrimination prohibited.
No financial institution may:
(1) require as a condition of providing any product or service or renewal of
any contract for providing a product or service to any customer, that the
customer acquire, finance, or negotiate any policy or contract of insurance
through a particular insurer, insurance producer, or registered firm;
(2) in connection with a loan or extension of credit that requires a borrower
to obtain insurance, reject an insurance policy solely because the policy has
been issued or underwritten by any person who is not associated with the
financial institution;
(3) impose any discriminatory requirement on any insurance producer who is
not associated with the financial institution that is not imposed on any
insurance producer who is associated with the financial institution; or
(4) if the financial institution is a registered firm, require any debtor,
insurer, or insurance producer to pay a separate charge in connection with the
handling of insurance
that is required under a contract, unless: (i) the financial institution is the
registered firm
providing the insurance, (ii) if the financial institution is not the
registered
firm providing the insurance, the charge would be uniformly applied if the
financial institution was the registered firm providing the insurance, or (iii)
the charge is otherwise permitted by this Code or other
applicable State or federal law.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1409)
Sec. 1409.
Disclosure.
A financial institution shall clearly and
conspicuously disclose in any written advertisement or promotional or
informational material regarding an insurance product that the insurance
offered, recommended, sponsored, or sold:
(1) is not a deposit;
(2) is not insured by the Federal Deposit Insurance Corporation, or in the
case of a credit union, by the National Credit Union Share Insurance Fund;
(3) is not guaranteed by the financial institution or an affiliated insured
depository institution; and
(4) where appropriate, involves investment risk, including potential loss of
principal.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1410)
Sec. 1410.
Misleading advertising.
No financial institution or registered
firm may employ any advertisement that would mislead or otherwise cause a
reasonable person to believe mistakenly that the State of Illinois or the
federal government is responsible for the insurance sales activities of the
financial institution or stands behind the financial institution's credit, or
that the financial institution, the State of Illinois, or the federal
government guarantees any returns on insurance products or is a source of
payment of any insurance obligation of or sold by the financial institution.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1411)
Sec. 1411.
Commissions and compensation.
No financial institution shall
pay, directly or indirectly, any commission, service fee, brokerage, or other
valuable consideration to any person for services as an insurance producer,
temporary insurance producer, or limited insurance representative, or for such
services by the person's members, officers, directors or employees, unless the
person, and any member, officer, director, or employee performing the service,
held a valid license regarding the class of insurance as to which the service
was rendered, or unless the person was a properly registered firm at the time
the service was performed. No person, other than a person properly licensed
or registered in accordance with Article XXXI of this Code at
the time the person performs services as an insurance producer, temporary
insurance producer, or limited insurance representative, shall accept any
commission, service fee, brokerage, or other valuable consideration for such
services. This Section shall not prevent payment or receipt of:
(1) renewal or other deferred commissions to or by any person entitled
thereto under this Section;
(2) fees to or by a financial institution or any other person for services
that do not require licensure as an insurance producer, temporary insurance
producer, limited insurance representative,
or registered firm; or
(3) consideration paid to a financial institution by a registered firm,
insurance producer, insurance company, or any other person pursuant to any
lease
agreement.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1412)
Sec. 1412.
Solicitations to loan applicants.
(a) A financial institution that
requires a customer to obtain insurance in connection with a loan or extension
of credit and that offers that insurance either directly or through an
affiliate shall clearly disclose to the customer in writing at the time of
written application or at closing if no written application is obtained
in a form substantially similar to the following:
"You may obtain insurance required in connection with
| | your loan or extension of credit from any insurance agent, broker, or firm that sells such insurance. Your choice of insurance provider will not affect our credit decision or your credit terms.".
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(b) This Section shall not apply when a financial institution is contacting
a customer in the course of direct or mass marketing to a group of persons in a
manner that bears no relation to the customer's loan application or credit
decision.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1413)
Sec. 1413.
Separate physical location and sales force when insurance is
solicited or sold in connection with a loan.
(a) An employee of a financial institution may not solicit or sell
insurance at the same desk where a loan transaction is conducted when the
insurance is solicited or sold in connection with the same loan.
(b) A loan officer of a financial institution
who is involved in the application, solicitation, or closing of a loan
transaction may not solicit or sell insurance in connection with the same loan,
but such loan officer may refer the loan customer to another insurance producer
who is not involved in the application, solicitation, or closing of the same
loan transaction.
(c) Subsections (a) and (b) of this Section shall not apply to a financial
institution, other than a credit union, or a branch location of a financial
institution, other than a credit union, that has less than
$100,000,000 in deposits.
(d) Subsections (a) and (b) of this Section shall not apply to a credit
union or a branch location of a credit union that has less than $30,000,000 in
deposits.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1414)
Sec. 1414.
Signage.
Signs concerning the availability of insurance
products offered by the financial institution or by any registered firm shall
be
clearly displayed in the same area where applications for loans or other
extensions of
credit are being taken or closed and shall include the disclosure set forth in
subsection (a) of Section 1412.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1415)
Sec. 1415.
Confidential customer information.
(a) A financial institution that is a registered firm may not release a
customer's insurance information to any person other than an officer, director,
employee, agent, or affiliate of the financial institution without the written
consent of the customer. For the purposes of this Section, "insurance
information" means information concerning the premiums, terms and conditions
of
insurance coverage, insurance claims, and the insurance history of a customer
contained in the financial institution's records.
(b) Subsection (a) of this Section shall not apply to:
(1) names, addresses, and telephone numbers derived
| | in any manner from the financial institution's records, or
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(2) the release of insurance information as otherwise
| | authorized by State or federal law.
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(c) A financial institution shall not require premium information when
requiring evidence of insurance in connection with a loan or extension of
credit and shall not use such premium information for the purpose of soliciting
insurance without the written consent of the customer.
(d) A financial institution may not use health information obtained from a
customer's insurance records for any purpose other than for its activities as a
registered firm pursuant to this Code.
(Source: P.A. 90-41, eff. 10-1-97.)
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(215 ILCS 5/1416)
Sec. 1416.
Prohibited defenses.
A violation of any provision of this Article shall not be used as a
defense by any person in any action by a financial institution to recover the
amount owing on any loan or extension of credit.
(Source: P.A. 90-41, eff. 10-1-97.)
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