SPRINGFIELD – People who join fraternal benefit societies for life insurance will have greater protection under a new plan that was approved by the Illinois Senate without opposition, Thursday.
“Many people put their money and their trust in benefit societies; we are backing up this trust with the power of the law,” said state Sen. Bill Haine, D-Alton, the plan’s sponsor.
Fraternal benefit societies – or mutual benefit societies – are non-profit organizations that use members’ premium payments to issue insurance coverage for their members and to advance charitable missions.
The proposal, Senate Bill 646, better regulates the leadership structures of these societies and allows early state intervention in the affairs of struggling organizations.
The new rules also allow underperforming societies to transfer members to other benefit societies to avoid insolvency.
The plan is supported by American Fraternal Alliance a trade group representing these organizations.
“Senate Bill 646 arms the Department of Insurance with the regulatory powers needed to help ensure the fiscal solvency of fraternal societies,” said Andrew Boron, director of the Department of Insurance. “We will continue to do everything in our power to make certain that consumers buying these products receive the benefits they were promised.”
“More than a half million Illinois consumers rely on fraternals for their families’ financial security and millions more rely on their financial support and community outreach. These rules provide consumers an added layer of protection and ensure fraternals can fulfill their unique community-service mission,” said Joseph Annotti, president and CEO of the AFA.
The plan now moves to the House.