December 1998 Newsletter - Illinois Division of Insurance

December 1998 -- #6

In this issue:

Year 2000 report
Staff announcements
Exam reports filed
Department rules review
Hearings
Producer regulatory action
Company action

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Year 2000 report

By Jeff Pirmann, Asst. Deputy Director, Financial Regulation Section

(Editor's note: The Illinois Department's position on Y2K exclusion endorsements was published in the June 1998 issue of Illinois Insurance and can be accessed on our web site.)

Where will you and your company's computer systems be on January 1, 2000?

The Illinois Department of Insurance has been asking that question since early in 1996. Recognizing "Y2K" as a significant business issue, the Department has been actively working with the Illinois insurance industry in an effort to help companies prepare for "the millennium bug" that will affect us all.

Activities here at the Department to keep current on this important issue include:

A continuing effort to increase industry awareness through public messages like this one and in industry presentations whenever possible;
Attendance at and participation in NAIC and industry working groups designed to assess industry preparedness. The most recent such meeting was the October 7, 1998, NAIC Year 2000 Summit Meeting in Kansas City. That session was attended by representatives from more that 30 state insurance departments, all of whom shared the concern that some portion of their domestic or foreign companies will not be fully compliant in time.
The keynote speaker at the meeting, Mr. Jose Valencia from Russell Martin & Associates, reported that while the insurance industry appears to be in better shape than most other segments of the economy, as many as one in four insurance companies will not be ready for January 1, 2000. He added that according to the survey completed by his firm, one of the least prepared segments of the economy is health care services. Certainly individual company preparation is important but the state of readiness of vendors and customers may be even more important.

Monitoring Y2K developments. The entire topic has been receiving an increasing amount of attention on all fronts. There are a number of Internet sites dedicated solely to this topic that provide daily reports and information. Some of the more interesting sites monitored by IDOI are:
- www.mitre.com;
- www.year2000.com;
- www.y2k.com;
- www.y2khealthcare.com;
- www.sec.gov/rules/concept/33-7558.htm; and
- www.bankinfo.com/year2000/shall.html.
Participation in government studies. The General Accounting Office (GAO), at the direction of Congress, is also concerned about how the insurance industry is coping with this problem. GAO has been charged with preparing a report for Congress that will be issued in early 1999. Representatives from GAO have been meeting with a number of nationally significant companies and various state insurance departments across the country, including Illinois. The meeting with GAO was held on October 30, 1998, and we have been promised a copy of their final report.
Survey of the domestic industry. The Department tried to assess the preparedness of individual companies through a survey that was sent to each Illinois domestic in March of 1998. So far 85.4% of the companies surveyed have responded and based on the responses it appears that only 18 companies may have real problems. These results are encouraging and suggest that most companies are seriously working on the issue.

As the clock keeps ticking, what can you expect from IDOI?

We intend to pursue each domestic company until all have responded to the March survey. Those that appear to be delinquent in their efforts to prepare will be notified and asked to prepare and submit a conversion plan. Inadequate or unacceptable plans may result in appropriate regulatory action including targeted examinations with the use of outside experts and possibly other penalties.

The Department will also be asking all domestic companies to file a supplemental report as part of the 1998 Annual Statement filing. This request for information is being mailed with the annual statement filing instructions to each company in early December. The supplement will be due on March 1. Your prompt and accurate completion and submission of this information will be appreciated.

Here at the Department, the thinking is that January 1, 2000 represents a significant opportunity for companies to differentiate themselves in the eyes of consumers. It is also recognized that there will not be any extensions of the project due date. January 1, 2000 will arrive as scheduled on time. If you and your company are ready to resolve or have resolved this business problem then you most likely will enjoy a strategic and competitive advantage. If you aren't prepared, we will be seeing more and more of each other.

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Staff announcements

Kelly Kruger was named Supervisor of Producer Licensing and Education on November 1, 1998. A member of the licensing staff since 1983, she succeeds Bruce Cassens who has joined the Department's Consumer Outreach program.

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Exam reports filed

Financial

Ancilla Insurance Trust -- 11/5/98
Breese Clinton County Mutual Fire Insurance Company -- 11/5/98
Buckeye Mutual Insurance Company -- 11/5/98
The Illinois Association of Building Maintenance
Contractors Group Self-Insurers Pool -- 9/29/98
Peru Waltham Mutual Insurance Company -- 11/5/98
State Farm Fire and Casualty Company -- 9/10/98
State Farm General Insurance Company -- 9/10/98
State Farm Indemnity Company -- 9/10/98
State Farm Mutual Automobile Insurance Company -- 9/10/98
Statewide Insurance Company -- 9/22/98
Societa Alleanza Riciglianese --10/22/98
Trustmark Insurance Company (Mutual) --10/27/98
Trustmark Life Insurance Company -- 0/27/98
Union Health Service -- 10/15/98

Market Conduct

American National Property & Casualty Company -- 10/02/98
Commonwealth Life Insurance Company -- 10/20/98
Conseco Life Insurance Company -- 11/02/98
Country Mutual Insurance Company -- 10/01/98
Fort Dearborn Life Insurance Company -- 10/01/98
Government Employees Insurance Company -- 11/02/98
Great Southern Life Insurance Company -- 10/16/98
Horace Mann Insurance Company -- 10/01/98
Life Insurance Company of Virginia -- 10/01/98
Montgomery Ward Life Insurance Company -- 10/28/98
Provident Life & Accident Insurance Company -- 10/20/98

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Department rules review

The full text of Department rules is printed in the Illinois Register published weekly by the Illinois Secretary of State's Index Department, 111 E. Monroe St., Springfield, IL 62756. Subscriptions are available from that source for an annual fee of $290. Issue numbers and a Department contact person are listed below after each rule summary.

Copies of rules are also available upon written request to the Department of Insurance at a $1 per page charge. Adopted rules are codified in Title 50 of the Illinois Administrative Code.

Rule 4201 (Insurance Cost Containment Annual Fee) was amended October 1, 1998, to reflect an increase in the annual fee paid by property and casualty insurers as authorized by Section 1206 of the Illinois Insurance Code. The amendments also add two new categories of direct written premiums to the total premium volume used to determine a company's annual fee and implement a new billing procedure. (Vol. 22, #42; Don Wulf)

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Hearings

Scheduled Hearings:

Mc Kenley Wilson
11/17/98 Hearing No. 3634R
Revocation of licensing authority

Rice Precision Machining, Inc.
National Council on Compensation Ins.
11/24/98 Hearing No. 3674
Workers compensation rate classification

Thomas Hill Jr.
To-Mas & Associates
11/24/98 Hearing No. 3691
Revocation of licensing authority

Keith Ray Grodeon
11/25/98 Hearing No. 3695
Revocation of licensing authority

Donald E. Moran
12/2/98 Hearing No. 3692
Suspension of licensing authority

Morris D. Hunt
12/2/98 Hearing No. 3686
Revocation of licensing authority

Clarence Owens
12/4/98 Hearing No. 3693
Denial of request for license

William G. Foster
12/8/98 Hearing No. 3694
Denial of request for license

Gloria R.Waters
1/7/99 Hearing No. 3689
Denial of licensing authority

Kenneth C. Waters
1/7/99 Hearing No. 3690
Revocation of licensing authority
Matters Settled without Hearing:

Underwriters Laboratories, Inc.
Hearing No. 3496
ILHGA's motion granted;
Appeal dismissed with prejudice 10/27/98

Completed Hearings:

Arthur M. Corrigan
Hearing No. 3672
Licensing authority revoked 9/23/98

Gary E. Stanis
Hearing No. 3665
Licensing authority revoked 9/24/98

The Trustees of The Booze Allen
& Hamilton Capital Accumulation Trust
Hearing No. 3673
Director's Order of 1/9/96 withdrawn 9/23/98

Lester G. Edwards
Hearing No. 3661
Licensing authority revoked 9/23/98

Auto Help Line of America
Hearing No. 3604
Cease and Desist Order made permanent 9/23/98

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Producer regulatory action

(Copies of regulatory orders are available upon written request to the Producer Regulatory Unit at a cost of $1/page. The number of pages are indicated in parentheses following the effective date.)

Revocation Licensing Authority

Larry Baxton
145 Blue Water Lane
Cahokia, Illinois
Effective 9/18/98 (2)

Christopher D. Collins
10525 South Perry #2
Chicago, IL
Effective 10/1/98 (2)

Lester G. Edwards
323 Chappel
Calumet City, IL
Effective 9/23/98 (9)

Robert Grossman
525 Hawthorne
Chicago, IL
Effective 10/22/98 (4)

Raymond Hamacek
2607 Chestnut Drive
Wonder Lake, IL
Effective 10/22/98 (2)

William G. McDonald
PO Box 842
Edwardsville, IL
Effective 10/1/98 (4)

Narinderpal S. Sood
2748 2nd Private Road
Flossmoor, IL
Effective 9/3/98 (2)

Gary E. Stanis
605 ½ W. Douglas
Freeport, IL
Effective 9/24/98 (10)

Voluntary Revocation

Essam Abdullah
9180 Meadowview Drive
Hickory Hills, IL
Effective 9/29/98 (1)

Edward B. Beavers
8959 S. Constance
Chicago, IL
Effective 9/22/98 (1)

Nelson G. Hallahan
5108 W. Greenridge Court
Peoria, IL
Effective 10/5/98 (1)

Cheryl A. McClelland
509 Dartmouth
O'Fallon, IL
Effective 9/29/98 (1)

Michael D. Richmond
11100 W. 167th Street
Orland Park, IL
Effective 9/11/98 (1)

Todd R. Scheel
1614 Ashland Avenue
Chicago Heights, IL
Effective 9/8/98 (1)

Order of Suspension

Darel D. Allen
PO Box 25
Perry, IL
Effective 10/22/98 (2)

Gregg R. Borowski
219 S. Cumberland
Park Ridge, IL
Effective 9/18/98 (2)

John L. Cheek
795 Wellington Avenue
Elk Grove, IL
Effective 10/22/98 (2)

Lee E. Kent
462 Bernice Court
Wheeling, IL
Effective 10/22/98 (2)

Linda D. Slaughter
17810 Tanglewood Court
Hazel Crest, IL
Effective 10/22/98 (2)

Arthur N. Wilson
802 East Glenwood Dyer Road
Glenwood, IL
Effective 9/18/98 (2)

Stipulation and Consent Order - Civil Forfeiture Paid

Douglas K. Allen
734 Rickard Road, Apt. 1
Springfield, IL
Effective 9/22/98 (4)

Allen Insurance Services, Inc.
2205 Wabash Avenue
Springfield, IL
Effective 9/22/98 (4)

Zia Ahmed
1150 Randville Drive #1L
Palatine, IL
Effective 10/30/98 (4)

Juanita F. Arensdorf
3814 Louisiana Road
Rockford, IL
Effective 9/8/98 (4)

John H. Camlin Co.
318 N. First Street
Rockford, IL
Effective 9/8/98 (4)

Philip James Cote
5252 Blodgett
Downers Grove, IL
Effective 8/25/98 (4)

Illinois Vehicle Premium Finance Company
5559 N. Elston Avenue
Chicago, IL
Effective 10/6/98 (4)

Insure on the Spot
7142 West Belmont Avenue
Chicago, Illinois
Effective 10/28/98 (5)

Darryl A. Johnson
16845 School Street
South Holland, IL
Effective 9/8/98 (3)

Frederica Johnson
16845 School Street
South Holland, IL
Effective 9/10/98 (3)

Michael G. Kariotis
3810 Timbers Edge Drive
Glenview, IL
Effective 10/28/98 (5)

Critchell Miller, Inc.
780 Lee Street
Des Plaines, IL
Effective 8/25/98 (4)

L. Peter DeGroot
715 W. Wrightwood, Apt. 2
Chicago, IL
Effective 8/12/98 (3)

EMC & Associates Insurance Agency, Inc.
2334 W. Lawrence, Suite 206
Chicago, IL
Effective 8/19/98 (6)

Joann E. Favia
135 Elizabeth Court
Wood Dale, IL
Effective 10/21/98 (2)

Kent P. Hardy
9314 Springfield
Evanston, IL
Effective 8/26/98 (3)

Larry Lee Hedberg
1414 Ramsey Close
Rockford, IL
Effective 9/8/98 (4)

Russell Glen Hedberg
1764 Red Oak Lane
Rockford, IL
Effective 9/8/98 (4)

Christopher Kariotis
1030 N. State #35H
Chicago, IL
Effective 10/29/98 (4)

Robert E. Klein
3227 Westlake Avenue, Unit B
Glenview, IL
Effective 8/11/98 (3)

Phillip J. Knoll
3445 W. 196th Street
Homewood, IL
Effective 9/28/98 (4)

Phillip J. Knoll Insurance Services, Inc.
61 Kaffel Court
Frankfort, IL
Effective 9/28/98 (4)

Jack Oliver Marcussen
3002 2nd Street
Moline, IL
Effective 7/1/98 (5)

William H. McGinn
944 S. Batavia Avenue
Geneva, IL
Effective 10/29/98 (4)

W.H. McGinn & Associates
944 S. Batavia
Geneva, IL
Effective 10/29/98 (4)

Ellyn McLain
5846 W. Addison, Apt. 1
Chicago, IL
Effective 8/19/98 (6)

Donald A. Mosser
411 N. Prospect St.
Rockford, IL
Effective 9/8/98 (4)

Scot D. Nyman
4553 Pepper Court
Rockford, IL
Effective 9/8/98 (4)

Dallas L. Peters
619 Sussex Lane
Crystal Lake, IL
Effective 8/25/98 (4)

Arthur P. Pizzello
27 W 405 Melrose Lane
Winfield, IL
Effective 9/22/98 (3)

Senior Care Services
1150 Randville Dr., #2L
Palatine, IL
Effective 10/30/98 (4)

Thomas R. Simon
6547 N. Oshkosh Avenue
Chicago, IL
Effective 8/25/98 (4)

Nancy M. Tidwell
6832 Didrikson Lane
Woodridge, IL
Effective 10/6/98 (4)

United Auto Insurance Agency, Inc.
7142 West Belmont Avenue
Chicago, IL
Effective 10/28/98 (4)

Jay W. Waterman
807 Church St., #209
Evanston, IL
Effective 8/25/98 (4)

Jeff S. Williams
1000 Barbarry Lane
Mt. Prospect, IL
Effective 8/11/98 (5)

Mitchell S. Wolf
15896 Pope Blvd.
Prairie View, IL
Effective 10/6/98 (4)

Stipulation & Consent Order - Civil Forfeiture Not Paid

Dale Allen Fietsam
1014 Shadow Ridge Crossing
O'Fallon, IL
Effective 9/8/98 (4)

Stipulation & Consent Order - No Civil Forfeiture

Paul Crane
1000 American Way
East Dundee, IL
Effective 10/29/98 (3)

Timothy W. Elafros
705 Juniper Drive
O'Fallon, IL
Effective 9/8/98 (4)

Dennis L. Prickett
1931 N. Hicks Road, Apt. 107
Palatine, IL
Effective 9/21/98 (4)

Jeffrey A. Schmidt
1205 1st Avenue
Rapids City, IL
Effective 9/8/98 (4)

Denial of Request for License

Paul E. Luckett
1021 Fairway Drive
Winter Park, FL
Effective 10/22/98 (2)

Edwin N. Millan
404 Wildberry Drive
Normal, IL
Effective 8/31/98 (9)

Director's Order

David R. Dillenberger
110 Fairway
Waterloo, IL
Effective 7/31/98 (9)

Other Action

McKenley Wilson
20212 S. Augusta Drive
Olympia Fields, IL
Rescission of Revocation

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Company action

New Admissions

Sunset Life Insurance Company of America, WA, 10/13/98
Erie Insurance Company, PA, 10/20/98
MGIC Credit Assurance Corporation, WI, 10/20/98
Hudson Insurance Company, DE, 10/27/98
AmCOMP Assurance Corporation, FL, 11/1/98
American Federation Insurance Company, FL, 11/6/98
Greatway Insurance Company, WI, 11/6/98
Williamsburg National Insurance Company, CA, 11/6/98
American Mercury Insurance Company, OK, 11/18/98

Fines

The following entities were issued Stipulation and Consent Orders and fined for Insurance Code violations and/or improper claims practices cited in their Illinois market conduct examinations:

Commonwealth Life Insurance Company, KY, 10/20/98, $15,000
Provident Life and Accident Insurance Company, TN, 10/20/98, $10,000
Conseco Life Insurance Company, IN, 11/2/98, $25,000
Government Employees Insurance Company (GEICO), DC, 11/2/98, $50,000