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OFFICE OF THE SPECIAL DEPUTY RECEIVER
When insurance
companies, which are incorporated or organized under Illinois
law, are placed into receivership, the Illinois Director of
Insurance becomes the Receiver. The
Director (as Receiver) is authorized by the Code to appoint a Special Deputy as his/her agent for the purpose of assisting him/her in the performance of his/her
receivership duties. The Office of the Special Deputy
(OSD), an Illinois chartered not-for-profit corporation,
supports the Director (as Receiver) and Special Deputy in
administering the affairs of insurance receivership companies.
A Conservator takes possession and control of an insurance company for purposes of determining its financial condition. The Conservator maintains possession and control of the company until the court terminates the conservation order, either with the entry of an order of rehabilitation or liquidation upon the petition of the Director, or upon a court order vacating the conservation proceedings. A Rehabilitator is vested with title to the company's property. The Rehabilitator conducts the business of the insurance company and implements a plan of rehabilitation if feasible. A Liquidator is also vested with title to the company's property, marshals the assets of the insurance company, liquidates those assets and pays court-approved creditor claims.
For Illinois domiciled or licensed insurers placed into liquidation, the Illinois
Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, and the Illinois Health Maintenance Organization Guaranty Association are mandated by statute to respond to the covered claims up to certain statutory caps. Similar funds and associations exist in most other states for similar purposes. The claims of policyholders of unauthorized, illegal, unlicensed or excess and surplus insurers are not generally afforded this protection.
Although the OSD performs certain functions under the direction of the Illinois Director of Insurance (in his/her capacity as statutory Receiver), individuals employed with the OSD are not employed by the State of Illinois and are not considered state employees. Additionally, the OSD does not receive any funding from the State of Illinois.
Accounting
The Accounting Department is responsible
for all accounting record keeping and financial reporting. It
processes the receipts and manages the investments of the
receivership estates. The department also handles the cash
disbursements to pay the operating expenses and assists in the
distribution of assets to the applicable estate creditors. In
addition, it provides assistance in conducting cash flow and
investment analysis, and in preparing financial reports as
required by
Article XIII.
Claim,
Corporate and Administrative Services
This department maintains the day-to-day
physical operation of all facilities within the control of the
Special Deputy, including facilities management, security,
purchasing, furniture and equipment. The department also
administers corporate and claim services, including proof of
claim forms, data entry, mass mailings, maintenance of policy
and claim files, and corporate business records.
Claims
The Claim Department is responsible for
coordinating the evaluation, noticing and adjudication of loss
claims arising under insurance policies issued by the
receivership companies as well as directing all subrogation
claims on behalf of the companies. It coordinates claim activity
of companies as they transition into conservation,
rehabilitation and/or liquidation and assists various guaranty
associations and funds, insurance departments, policyholders and
claimants in resolving claim problems. It also provides
information to the Reinsurance Department to assist in the
tracking of recoveries on facultative or ceded reinsurance
contracts. This department determines the total liabilities of
a receivership estate in order to permit final distributions of
assets to the policyholders and creditors.
Estate Strategic Planning
The Estate Strategic Planning Department
performs estate management, supervision and reporting in support
of the timely performance and closing of receivership estates.
This department is responsible for developing and implementing
policy relating to the dissemination of estate information on
OSD’s website, as well as producing the annual Governor’s
Report. The department also participates in the fieldwork
related to the supervision of new estates and in developing
their Strategic Plans. Estate Strategic Planning represents the
OSD as a member of the NAIC Receivership and Technology Working
Group.
Human Resources
The Human Resources Department develops and administers
policies and programs in the areas of employment, compensation,
benefits, employee relations, payroll and related functions.
This department also administers all on-site human resources and
payroll activities for companies under the control of the Office
of the Special Deputy.
Information Technology
The Information Technology department
administers and directs the operation of all computer systems
used by the OSD and companies in receivership. The department
develops software and provides systems that support and improve
receivership operations with the goals of maximizing assets and
providing timely delivery of assets to claimants. Upon the
closing of a receivership company’s office, this department
sells the computer equipment owned by the company.
Legal
The OSD Legal Department provides legal
representation to the Director of Insurance of the State of
Illinois, acting as the court-affirmed receiver of impaired,
insolvent or troubled insurance companies, in regards to the
Director’s performance of the statutorily mandated duties and
obligations set forth in Article XIII of the Illinois Insurance
Code; to insure compliance with those statutory provisions, as
well as other state and federal statutory requirements; to
assist the Director in the marshaling of estate assets and the
resolution of estate liabilities in a manner that is most
beneficial to the policy holders and creditors of the insurance
companies; and to represent the Director, as receiver, and the
insurance company receivership estates under his or her charge,
in the courts and other forums. The Department also provides
representation and legal advice to the OSD with regard to
corporate and other matters.
Reinsurance Operations
The Reinsurance Operations Department is
responsible for letter of credit, trust, and other cash
collateral accounting administration, commutation analysis/
negotiation, field audits of ceding companies, inspections of
records, reinsurance underwriting analysis, reinsurance
arbitration and litigation support, tracking and analysis of
proofs of claim filed by applicable reinsured creditors,
reinsurers, and reinsurance brokers and intermediaries. The
department identifies potential cash reconciliation problems
with MGAs, brokers and reinsurance entities, as well as
supervising retained consultants and actuaries and coordinating
internal reinsurance operations, both on-site and off-site.
Reinsurance Operations is also responsible for completing
special financial reinsurance-related reviews, audits and
investigations from the reinsurance standpoint. Further, it
develops and documents reinsurance accounting systems,
procedures and controls. The department maintains and finalizes
reinsurance transactions and recoveries while controlling
against unauthorized draw downs from different forms of
security, including letters of credit.
Tax and Compliance
The Tax and Compliance Department prepares various tax and
compliance reports required by federal and state governmental
entities. These include income tax, franchise tax, premium tax
and miscellaneous information returns. The department
identifies and secures tax refunds and processes proofs of claim
and correspondence from the Internal Revenue Service, state
departments of revenue and other state agencies. This department
also develops and maintains the Guaranty Fund and Association
Early Access Distribution and Expense Reimbursement plans for
the various companies in receivership. In addition, this
department is responsible for the marshaling of company special
deposits. The Tax and Compliance Department is also responsible
for coordinating the annual audit of the OSD and estates in
receivership by an independent accounting firm.
Office of the Special Deputy Receiver
222 Merchandise Mart Plaza, Suite 1450
Chicago, Illinois 60654
1 (312) 836-9500
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