Illinois Producer Licensing Bill Signed

Springfield, IL -- Governor George H. Ryan signed into law on August 16, 2001, a new insurance producer licensing bill, House Bill 2994, that brings Illinois into compliance with the federal Gramm-Leach-Bliley Act (GLBA). The law was a Department of Insurance initiative and was sponsored by Rep. Terry Parke (R-Schaumburg) and Sen. Robert Madigan (R-Lincoln).

GLBA requires a minimum of 29 states to enact, by November 2002, either uniform agent licensing laws and regulations or reciprocity laws and regulations governing the licensure of non-resident agents or face national licensing standards established by a newly created National Association of Registered Agents and Brokers (NARAB).

"I am not only pleased that Illinois is one of 36 states that have now enacted laws designed to satisfy the GLBA requirements for licensing reciprocity, but that we are one of the larger states to do so," said Illinois Insurance Director Nat Shapo. "Governor Ryan's action helps ensure that licensing regulation remains in the hands of state governments and is not shifted to a federal entity. House Bill 2994 also establishes Illinois, which boasts over $47.7 billion in annual insurance premiums, as a model to other states that have yet to consider producer licensing legislation."

Shapo also noted the symbolism of the bill's sponsors. "As President of the National Conference of Insurance Legislators, Representative Parke is a national leader in preserving and enhancing state regulation. And it is fitting that Senator Madigan, who just accepted a position on the Illinois Industrial Commission, would have such an important law enacted as one of his last accomplishments as a state legislator."

Among the key provisions of the Illinois law are:

• Provides a total re-write of the present producer licensing law to conform with the National Association of Insurance Commissioners (NAIC) model regarding definitions, exceptions to licensing, termination notifications, and reciprocity provisions.
• Provides for reciprocity in the licensure of nonresidents by permitting them to obtain an Illinois license if they are currently licensed as a resident (in good standing) in their own state, have paid the required fees for licensure in Illinois, and have provided Illinois with a copy of their application for a license in their home state; and if their home state reciprocally grants nonresident licenses to residents of Illinois.
• Exempts persons who are currently licensed in another state from having to take an Illinois examination and meeting pre-licensing education requirements.
• Authorizes the Director to waive any requirements for nonresident license applicants who have a valid license from their home state if their home state awards nonresident licenses to Illinois residents on the same basis.

House Bill 2994 also requires that a surplus lines producer must complete a prelicensing course of study in lieu of passing a written examination; provides that the submission of insurance contract information by surplus line producers and the countersignature by the Surplus Line Association of Illinois may be performed electronically; and requires that each surplus line producer must maintain electronic or paper copies of surplus line insurance contracts which shall be open at all times for inspection by the Director and the Surplus Line Association of Illinois.

The new law is effective January 1, 2002. The Department of Insurance worked closely with the Professional Independent Insurance Agents of Illinois (PIIAI) and other members of the insurance industry for the passage of House Bill 2994. "These interested parties provided valuable support on behalf of effective and consistent regulation," Shapo said.