SB2589 Summary

• Amends the Illinois Insurance Code sections governing risk retention groups by adding new governance standards requiring a majority of independent board directors, audit committees, and written policies on conflicts of interest and ethics for directors and officers.

• Establishes definitions and requirements for "material relationships" between directors and risk retention groups, with specific thresholds based on compensation exceeding 5% of gross written premium or 2% of surplus.

• Requires material service provider contracts to have maximum 5-year terms, approval by independent directors, and 30-day advance notice to the Department of Insurance before execution.

• Mandates compliance within one year for existing risk retention groups and at licensure for new groups with respect to board independence, audit committees composed of at least three independent directors, and annual disclosure of governance standards.

• Adds NAIC (National Association of Insurance Commissioners) to existing notification and approval processes for risk retention groups and updating references to forms and standards throughout the statute.