About OSD

Background on Insurance Receivership and OSD

Following the National Association of Insurance Commissioners’ (the “NAIC”) model law and state accreditation requirement, Article XIII (215 ILCS 5/187 et seq.) of the Illinois Insurance Code provides that Illinois Director of Insurance is the statutory receiver for insolvent or financially troubled Illinois insurance companies placed in judicially supervised receivership. As receiver, the Director functions like a bankruptcy trustee. Subject to court supervision, the Director marshals assets and distributes those assets to consumers and other creditors pursuant to statutory claim procedures. All of this is done at no taxpayer expense, as the expenses of the receivership are paid by the insolvent receivership estate.

The Insurance Code provides that the Director may appoint a Special Deputy and other employees to assist in the administration of these receiverships. The Special Deputy  acts as the Receiver’s agent, assisting him in his statutory duties pursuant to authority granted under Article XIII (215 ILCS 5/202(a)). Since at least 1981, the Director has appointed one Special Deputy for all receivership estates, and utilized a group of employees to provide the core servicing of the receivership estates. In 1991, an Illinois not-for-profit corporation, Office of the Special Deputy Receiver (“OSD”) was formed to serves as a corporate vehicle for employing the professional and clerical staff that service the receivership estates for the Director and Special Deputy. In 1993, the Illinois Legislature amended certain provisions of Article XIII in order to give statutory structure to many of the OSD’s practices, including obtaining annual independent audits of the OSD and each receivership estate, copies of which are annually provided to the Governor, legislative leaders and the Auditor General, who also reviews the independent auditor’s workpapers. As of September 1, 2009, OSDR has 68 employees and is servicing 18 receivership estates.

Business Principles of the Office of the Special Deputy

Adopted May 2008 

I.       WE ARE ESTATE OWNED 

Our business practices are designed to benefit estates. Estates are our “shareholders”. We treat estate assets by that principle. We respect the trust placed in us by the Director of Insurance’s assignment of each estate. 

II.      WE ARE OBSESSED WITH EXCELLENCE 

Not concerned with excellence or mindful of excellence but obsessed with excellence. We are obsessed with excellence in our ~
Quality
Speed
Substantive expertise  

III.     EVERYONE CONTRIBUTES TO OUTPUT         

Our output is maximization of assets, the fair disposition of claims, and timely delivery of assets to claimants. We measure ourselves by our individual contribution to and our collective achievement of that output. We are accountable for our performance and productivity. 

IV.     WE COMMUNICATE OPENLY, HONESTLY AND RESPECTFULLY 

We are not afraid of a fact or where a fact might take us. For us a question is just a question, and a discussion is just a discussion. We are confident enough in ourselves and our colleagues to identify mistakes and make plans for improvement. We treat people respectfully. We encourage each other. 

V.      WE ARE ETHICAL AND OPEN

Our business ethics are first-rate. We welcome scrutiny and open dialogue with all stakeholders in our operations. 

Patrick D. Hughes Biography

Patrick Hughes was appointed Illinois Special Deputy Receiver by Illinois Insurance Director Michael McRaith in February 2008. As Special Deputy Receiver, Mr. Hughes administers the receiverships of all Illinois domiciled companies in liquidation, rehabilitation and conservation. He also serves as the Chief Executive Officer of the Office of the Special Deputy Receiver, an Illinois not-for-profit corporation through which the Special Deputy employs additional receivership resources. 

Mr. Hughes represents Illinois on the NAIC’s Receivership and Insolvency Task Force and the Restructuring Mechanisms for Troubled Companies Subgroup, contributing to those committees’ assessment of alternative resolution mechanisms, development of model legislation and analysis of receivership trends. He is also a member of the International Association of Insurance Receivers.  Mr. Hughes is a Commissioner on the National Conference of Commissioners on Uniform State Laws. 

Prior to his appointment as Special Deputy, Mr. Hughes served five years with the State of Illinois, in various positions focusing on regulatory law and practice. He had been a practicing attorney in both corporate transactions and commercial litigation before entering government employment. He served as law clerk to U.S. District Court Judge James Alesia early in his career. 

Mr. Hughes graduated from DePaul University College of Law, where he was Executive Editor of the Law Review. He graduated from Georgetown University with a bachelors degree in Government, where he was General Manager of the student radio station.  

Mr. Hughes and his wife Ann live in Wilmette, Illinois and have four children, ranging in ages from 5 to 12 years. Among other community commitments, Mr. Hughes is a board member of the Chicago Debate Commission, promoting competitive debate in Chicago public high schools.