P&CIllinoismedium
Under 215 ILCS 5/Article XIII, what is the proper order of formal delinquency proceedings the IDOI Director may pursue against a financially impaired insurer?
AImmediate liquidation only; no rehabilitation stage exists
BVoluntary bankruptcy under federal Chapter 7 before any state action
CMandatory merger with another insurer ordered by the Director
Conservation or rehabilitation, then liquidation if rehabilitation fails
Why this is the answer
215 ILCS 5/Article XIII (§§ 187 et seq.) governs delinquency proceedings for impaired Illinois insurers. The Director, as statutory receiver, may obtain a court order of conservation or rehabilitation to rehabilitate the insurer; only if rehabilitation is not feasible does the court order liquidation. Insurers are exempt from federal Chapter 7 bankruptcy under 11 U.S.C. 109(b)(2); no mandatory merger order exists; and immediate liquidation skips the rehab stage.
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