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Illinois Statutes Chapter 215. Insurance § 5/123D-20. Relevant criteria

Current as of January 01, 2025 | Updated by Findlaw Staff

§ 123D-20. Relevant criteria.

(a) A nonprofit risk organization must meet all of the following criteria:

(1) Be organized and operated solely to insure risks of its members.

(2) Directly provide information to its members with respect to loss control and risk management.

(3) Be comprised solely of members.

(4) Be organized under this Article.

(5) Be exempt from Illinois income taxes with respect to its activities or operations in furtherance of the powers conferred upon it by this Article.

(6) Obtain at least $1,000,000 in startup capital from nonmember charitable organizations. The startup capital may take the form of advancements or borrowings in the form permitted by Section 56 or 76 of this Code, as applicable. Startup capital may be used to satisfy the financial requirements contained in this Article applicable to a nonprofit risk organization only to the extent the Director determines that it complies with those requirements.

(7) Be controlled by a board of directors elected by its members.

(8) Require in its organizational documents that:

(A) each member of the nonprofit risk organization shall at all times be an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code and exempt from tax under subsection (a) of Section 501 of the Internal Revenue Code;

(B) any member that receives a final determination that it no longer qualifies as an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code shall immediately notify the nonprofit risk organization of the determination and the effective date of the determination; and

(C) each policy of insurance issued by the nonprofit risk organization shall provide that the policy does not cover the insured with respect to events occurring after the date the final determination was issued to the insured.

(b) An organization shall not cease to qualify as a nonprofit risk organization solely by reason of the failure of any of its members to continue to be an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code if, within a reasonable period of time after the nonprofit risk organization is notified as required under subparagraph (8)(B) of subsection (a) of this Section, the nonprofit risk organization takes such action as may be reasonably necessary to remove the member from the nonprofit risk organization.

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Cite this article: FindLaw.com - Illinois Statutes Chapter 215. Insurance § 5/123D-20. Relevant criteria - last updated January 01, 2025 | https://codes.findlaw.com/il/chapter-215-insurance/il-st-sect-215-5-123d-20/

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