Illinois 2025-2026 Regular Session

Illinois Senate Bill SB1289 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	SB1289 EngrossedLRB104 08171 BAB 18220 b SB1289 Engrossed LRB104 08171 BAB 18220 b
2		-	SB1289 Engrossed LRB104 08171 BAB 18220 b
	1	+	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1289 Introduced 1/28/2025, by Sen. Michael E. Hastings SYNOPSIS AS INTRODUCED: 215 ILCS 5/445 from Ch. 73, par. 1057 Amends the Illinois Insurance Code. In provisions concerning surplus line insurance, changes the definition of "home state". Makes other conforming changes. LRB104 08171 BAB 18220 b A BILL FOR 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1289 Introduced 1/28/2025, by Sen. Michael E. Hastings SYNOPSIS AS INTRODUCED: 215 ILCS 5/445 from Ch. 73, par. 1057 215 ILCS 5/445 from Ch. 73, par. 1057 Amends the Illinois Insurance Code. In provisions concerning surplus line insurance, changes the definition of "home state". Makes other conforming changes. LRB104 08171 BAB 18220 b LRB104 08171 BAB 18220 b A BILL FOR
	2	+	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1289 Introduced 1/28/2025, by Sen. Michael E. Hastings SYNOPSIS AS INTRODUCED:
	3	+	215 ILCS 5/445 from Ch. 73, par. 1057 215 ILCS 5/445 from Ch. 73, par. 1057
	4	+	215 ILCS 5/445 from Ch. 73, par. 1057
	5	+	Amends the Illinois Insurance Code. In provisions concerning surplus line insurance, changes the definition of "home state". Makes other conforming changes.
	6	+	LRB104 08171 BAB 18220 b LRB104 08171 BAB 18220 b
	7	+	LRB104 08171 BAB 18220 b
	8	+	A BILL FOR
	9	+	SB1289LRB104 08171 BAB 18220 b SB1289 LRB104 08171 BAB 18220 b
	10	+	SB1289 LRB104 08171 BAB 18220 b
3	11		1 AN ACT concerning regulation.
4	12		2 Be it enacted by the People of the State of Illinois,
5	13		3 represented in the General Assembly:
6	14		4 Section 5. The Illinois Insurance Code is amended by
7	15		5 changing Section 445 as follows:
8	16		6 (215 ILCS 5/445) (from Ch. 73, par. 1057)
9	17		7 Sec. 445. Surplus line.
10	18		8 (1) Definitions. For the purposes of this Section:
11	19		9 "Affiliate" means, with respect to an insured, any entity
12	20		10 that controls, is controlled by, or is under common control
13	21		11 with the insured. For the purpose of this definition, an
14	22		12 entity has control over another entity if:
15	23		13 (A) the entity directly or indirectly or acting
16	24		14 through one or more other persons owns, controls, or has
17	25		15 the power to vote 25% or more of any class of voting
18	26		16 securities of the other entity; or
19	27		17 (B) the entity controls in any manner the election of
20	28		18 a majority of the directors or trustees of the other
21	29		19 entity.
22	30		20 "Affiliated group" means any group of entities that are
23	31		21 all affiliated.
24	32		22 "Authorized insurer" means an insurer that holds a
25	33		23 certificate of authority issued by the Director but, for the
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	37	+	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1289 Introduced 1/28/2025, by Sen. Michael E. Hastings SYNOPSIS AS INTRODUCED:
	38	+	215 ILCS 5/445 from Ch. 73, par. 1057 215 ILCS 5/445 from Ch. 73, par. 1057
	39	+	215 ILCS 5/445 from Ch. 73, par. 1057
	40	+	Amends the Illinois Insurance Code. In provisions concerning surplus line insurance, changes the definition of "home state". Makes other conforming changes.
	41	+	LRB104 08171 BAB 18220 b LRB104 08171 BAB 18220 b
	42	+	LRB104 08171 BAB 18220 b
	43	+	A BILL FOR
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	49	+	215 ILCS 5/445 from Ch. 73, par. 1057
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34	68		1 purposes of this Section, does not include a domestic surplus
35	69		2 line insurer as defined in Section 445a or any residual market
36	70		3 mechanism.
37	71		4 "Exempt commercial purchaser" means any person purchasing
38	72		5 commercial insurance that, at the time of placement, meets the
39	73		6 following requirements:
40	74		7 (A) The person employs or retains a qualified risk
41	75		8 manager to negotiate insurance coverage.
42	76		9 (B) The person has paid aggregate nationwide
43	77		10 commercial property and casualty insurance premiums in
44	78		11 excess of $100,000 in the immediately preceding 12 months.
45	79		12 (C) The person meets at least one of the following
46	80		13 criteria:
47	81		14 (I) The person possesses a net worth in excess of
48	82		15 $20,000,000, as such amount is adjusted pursuant to
49	83		16 the provision in this definition concerning percentage
50	84		17 change.
51	85		18 (II) The person generates annual revenues in
52	86		19 excess of $50,000,000, as such amount is adjusted
53	87		20 pursuant to the provision in this definition
54	88		21 concerning percentage change.
55	89		22 (III) The person employs more than 500 full-time
56	90		23 or full-time equivalent employees per individual
57	91		24 insured or is a member of an affiliated group
58	92		25 employing more than 1,000 employees in the aggregate.
59	93		26 (IV) The person is a not-for-profit organization
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70	104		1 or public entity generating annual budgeted
71	105		2 expenditures of at least $30,000,000, as such amount
72	106		3 is adjusted pursuant to the provision in this
73	107		4 definition concerning percentage change.
74	108		5 (V) The person is a municipality with a population
75	109		6 in excess of 50,000 persons.
76	110		7 Effective on January 1, 2015 and each fifth January 1
77	111		8 occurring thereafter, the amounts in subitems (I), (II), and
78	112		9 (IV) of item (C) of this definition shall be adjusted to
79	113		10 reflect the percentage change for such 5-year period in the
80	114		11 Consumer Price Index for All Urban Consumers published by the
81	115		12 Bureau of Labor Statistics of the Department of Labor.
82	116		13 "Home state" means the following:
83	117		14 (A) With respect to an insured, except as provided in
84	118		15 item (B) of this definition:
85	119		16 (I) the state in which an insured maintains its
86	120		17 principal place of business or, in the case of an
87	121		18 individual, the individual's principal residence; or
88	122		19 (II) if 100% of the insured risk is located out of
89	123		20 the state referred to in subitem (I), the state to
90	124		21 which the greatest percentage of the insured's taxable
91	125		22 premium for that insurance contract is allocated.
92	126		23 (B) If more than one insured from an affiliated group
93	127		24 are named insureds on a single surplus line insurance
94	128		25 contract, then "home state" means the home state, as
95	129		26 determined pursuant to item (A) of this definition, of the
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106	140		1 member of the affiliated group that has the largest
107	141		2 percentage of premium attributed to it under such
108	142		3 insurance contract.
109	143		4 If more than one insured from a group that is not
110	144		5 affiliated are named insureds on a single surplus line
111	145		6 insurance contract, then: (I) if individual group members
112	146		7 pay 100% of the premium for the insurance from their own
113	147		8 funds, "home state" means the home state, as determined
114	148		9 pursuant to item (A) of this definition, of each
115	149		10 individual group member; each individual group member's
116	150		11 coverage under the surplus line insurance contract shall
117	151		12 be treated as a separate surplus line contract for the
118	152		13 purposes of this Section; (II) otherwise, "home state"
119	153		14 means the home state, as determined pursuant to item (A)
120	154		15 of this definition, of the group.
121	155		16 Nothing in this definition shall be construed to alter the
122	156		17 terms of the surplus line insurance contract.
123	157		18 "Master policy" means a surplus line insurance contract
124	158		19 with a single set of general contractual terms that are
125	159		20 designed to apply on a group basis to multiple insureds who may
126	160		21 or may not be affiliated and who may be added to or removed
127	161		22 from the contract throughout the course of the contract
128	162		23 period. A master policy may include certain provisions that
129	163		24 vary for each insured depending on the insured's
130	164		25 characteristics and the coverage sought.
131	165		26 "Multi-State risk" means a risk with insured exposures in
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142	176		1 more than one State.
143	177		2 "NAIC" means the National Association of Insurance
144	178		3 Commissioners or any successor entity.
145	179		4 "Personal lines insurance" means insurance as defined in
146	180		5 subsection (a), (b), or (c) of Section 143.13 of this Code.
147	181		6 "Premium" means any amount designated as premium on the
148	182		7 declarations page or elsewhere in a policy and on any
149	183		8 endorsement, but does not include taxes, the Surplus Line
150	184		9 Association of Illinois recording fee, or any other fee.
151	185		10 "Program business" means a clearly defined group of
152	186		11 insurance contracts procured by a licensed surplus line
153	187		12 producer from an unauthorized insurer, under a single
154	188		13 agreement between the producer and insurer, for insureds with
155	189		14 the same or similar characteristics and containing the same or
156	190		15 similar contract terms.
157	191		16 "Qualified risk manager" means, with respect to a
158	192		17 policyholder of commercial insurance, a person who meets all
159	193		18 of the following requirements:
160	194		19 (A) The person is an employee of, or third-party
161	195		20 consultant retained by, the commercial policyholder.
162	196		21 (B) The person provides skilled services in loss
163	197		22 prevention, loss reduction, or risk and insurance coverage
164	198		23 analysis, and purchase of insurance.
165	199		24 (C) With regard to the person:
166	200		25 (I) the person has:
167	201		26 (a) a bachelor's degree or higher from an
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178	212		1 accredited college or university in risk
179	213		2 management, business administration, finance,
180	214		3 economics, or any other field determined by the
181	215		4 Director or his designee to demonstrate minimum
182	216		5 competence in risk management; and
183	217		6 (b) the following:
184	218		7 (i) three years of experience in risk
185	219		8 financing, claims administration, loss
186	220		9 prevention, risk and insurance analysis, or
187	221		10 purchasing commercial lines of insurance; or
188	222		11 (ii) alternatively has:
189	223		12 (AA) a designation as a Chartered
190	224		13 Property and Casualty Underwriter (in this
191	225		14 subparagraph (ii) referred to as "CPCU")
192	226		15 issued by the American Institute for
193	227		16 CPCU/Insurance Institute of America;
194	228		17 (BB) a designation as an Associate in
195	229		18 Risk Management (ARM) issued by the
196	230		19 American Institute for CPCU/Insurance
197	231		20 Institute of America;
198	232		21 (CC) a designation as Certified Risk
199	233		22 Manager (CRM) issued by the National
200	234		23 Alliance for Insurance Education &
201	235		24 Research;
202	236		25 (DD) a designation as a RIMS Fellow
203	237		26 (RF) issued by the Global Risk Management
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214	248		1 Institute; or
215	249		2 (EE) any other designation,
216	250		3 certification, or license determined by
217	251		4 the Director or his designee to
218	252		5 demonstrate minimum competency in risk
219	253		6 management;
220	254		7 (II) the person has:
221	255		8 (a) at least 7 years of experience in risk
222	256		9 financing, claims administration, loss prevention,
223	257		10 risk and insurance coverage analysis, or
224	258		11 purchasing commercial lines of insurance; and
225	259		12 (b) has any one of the designations specified
226	260		13 in subparagraph (ii) of paragraph (b);
227	261		14 (III) the person has at least 10 years of
228	262		15 experience in risk financing, claims administration,
229	263		16 loss prevention, risk and insurance coverage analysis,
230	264		17 or purchasing commercial lines of insurance; or
231	265		18 (IV) the person has a graduate degree from an
232	266		19 accredited college or university in risk management,
233	267		20 business administration, finance, economics, or any
234	268		21 other field determined by the Director or his or her
235	269		22 designee to demonstrate minimum competence in risk
236	270		23 management.
237	271		24 "Residual market mechanism" means an association,
238	272		25 organization, or other entity described in Article XXXIII of
239	273		26 this Code or Section 7-501 of the Illinois Vehicle Code or any
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250	284		1 similar association, organization, or other entity.
251	285		2 "State" means any state of the United States, the District
252	286		3 of Columbia, the Commonwealth of Puerto Rico, Guam, the
253	287		4 Northern Mariana Islands, the Virgin Islands, and American
254	288		5 Samoa.
255	289		6 "Surplus line insurance" means insurance on a risk:
256	290		7 (A) of the kinds specified in Classes 2 and 3 of
257	291		8 Section 4 of this Code; and
258	292		9 (B) that is procured from an unauthorized insurer
259	293		10 after the insurance producer representing the insured or
260	294		11 the surplus line producer is unable, after diligent
261	295		12 effort, to procure the insurance from authorized insurers;
262	296		13 and
263	297		14 (C) where Illinois is the home state of the insured,
264	298		15 for policies effective, renewed or extended on July 21,
265	299		16 2011 or later and for multiyear policies upon the policy
266	300		17 anniversary that falls on or after July 21, 2011; and
267	301		18 (D) that is located in Illinois, for policies
268	302		19 effective prior to July 21, 2011.
269	303		20 "Taxable premium" means a premium for any risk that is
270	304		21 located in or attributed to any state.
271	305		22 "Unauthorized insurer" means an insurer that does not hold
272	306		23 a valid certificate of authority issued by the Director but,
273	307		24 for the purposes of this Section, shall also include a
274	308		25 domestic surplus line insurer as defined in Section 445a.
275	309		26 (1.5) Procuring surplus line insurance; surplus line
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286	320		1 insurer requirements.
287	321		2 (a) License required. Insurance producers may procure
288	322		3 surplus line insurance only if licensed as a surplus line
289	323		4 producer under this Section.
290	324		5 (b) Domestic and foreign insurer eligibility. Licensed
291	325		6 surplus line producers may procure surplus line insurance
292	326		7 from an unauthorized insurer domiciled in any state only
293	327		8 if the insurer:
294	328		9 (i) is permitted in its domiciliary jurisdiction
295	329		10 to write the type of insurance involved; and
296	330		11 (ii) has, based upon information available to the
297	331		12 surplus line producer, a policyholders surplus of not
298	332		13 less than $15,000,000 determined in accordance with
299	333		14 the laws of its domiciliary jurisdiction; and
300	334		15 (iii) has standards of solvency and management
301	335		16 that are adequate for the protection of policyholders.
302	336		17 Where an unauthorized insurer does not meet the
303	337		18 standards set forth in (ii) and (iii) above, a surplus
304	338		19 line producer may, if necessary, procure insurance from
305	339		20 that insurer only if prior written warning of such fact or
306	340		21 condition is given to the insured by the insurance
307	341		22 producer or surplus line producer.
308	342		23 (c) Alien insurer eligibility. Licensed surplus line
309	343		24 producers may procure surplus line insurance from an
310	344		25 unauthorized insurer not domiciled in any state only if
311	345		26 the insurer meets the standards for unauthorized insurers
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322	356		1 domiciled in any state in paragraph (b) of this subsection
323	357		2 (1.5) or is listed on the Quarterly Listing of Alien
324	358		3 Insurers maintained by the International Insurers
325	359		4 Department of the NAIC at the time of procurement. The
326	360		5 Director shall make the Quarterly Listing of Alien
327	361		6 Insurers available to surplus line producers without
328	362		7 charge.
329	363		8 (d) Prohibited transactions. Insurance producers shall
330	364		9 not procure from an unauthorized insurer an insurance
331	365		10 policy:
332	366		11 (i) that is designed to satisfy the proof of
333	367		12 financial responsibility and insurance requirements in
334	368		13 any Illinois law where the law requires that the proof
335	369		14 of insurance is issued by an authorized insurer or
336	370		15 residual market mechanism;
337	371		16 (ii) that covers the risk of accidental injury to
338	372		17 employees arising out of and in the course of
339	373		18 employment according to the provisions of the Workers'
340	374		19 Compensation Act; or
341	375		20 (iii) that insures any Illinois personal lines
342	376		21 risk that is eligible for residual market mechanism
343	377		22 coverage, unless the insured or prospective insured
344	378		23 requests limits of liability greater than the limits
345	379		24 provided by the residual market mechanism. In the
346	380		25 course of making a diligent effort to procure
347	381		26 insurance from authorized insurers, an insurance
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358	392		1 producer shall not be required to submit a risk to a
359	393		2 residual market mechanism when the risk is not
360	394		3 eligible for coverage or exceeds the limits available
361	395		4 in the residual market mechanism.
362	396		5 Where there is an insurance policy issued by an
363	397		6 authorized insurer or residual market mechanism insuring a
364	398		7 risk described in item (i), (ii), or (iii) above, nothing
365	399		8 in this paragraph shall be construed to prohibit a surplus
366	400		9 line producer from procuring from an unauthorized insurer
367	401		10 a policy insuring the risk on an excess or umbrella basis
368	402		11 where the excess or umbrella policy is written over one or
369	403		12 more underlying policies.
370	404		13 (e) Exempt commercial purchaser diligent effort.
371	405		14 Licensed surplus line producers may procure surplus line
372	406		15 insurance from an unauthorized insurer for an exempt
373	407		16 commercial purchaser without making the required diligent
374	408		17 effort to procure the insurance from authorized insurers
375	409		18 if:
376	410		19 (i) the producer has disclosed to the exempt
377	411		20 commercial purchaser that such insurance may or may
378	412		21 not be available from authorized insurers that may
379	413		22 provide greater protection with more regulatory
380	414		23 oversight; and
381	415		24 (ii) the exempt commercial purchaser has
382	416		25 subsequently in writing requested the producer to
383	417		26 procure such insurance from an unauthorized insurer.
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390	424
391	425
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393		-	SB1289 ~~Engrossed~~ - 12 - LRB104 08171 BAB 18220 b
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394	428		1 (f) Commercial wholesale transaction diligent effort.
395	429		2 A licensed surplus line producer may procure a surplus
396	430		3 line insurance contract, other than a personal lines
397	431		4 insurance contract, from an unauthorized insurer without
398	432		5 making the required diligent effort to procure the
399	433		6 insurance from authorized insurers if the risk was
400	434		7 referred to the surplus line producer by an
401	435		8 Illinois-licensed insurance producer who is not affiliated
402	436		9 with the surplus line producer.
403	437		10 (g) Master policy diligent effort. For a master policy
404	438		11 insurance contract, a licensed surplus line producer may
405	439		12 make the required diligent effort to procure the insurance
406	440		13 from authorized insurers annually for the master policy
407	441		14 rather than individually for each insured that is added
408	442		15 during the policy period. The diligent effort shall
409	443		16 include all variable provisions of the master policy.
410	444		17 (h) Program business diligent effort. For program
411	445		18 business, a licensed surplus line producer may make the
412	446		19 required diligent effort to procure the insurance from
413	447		20 authorized insurers annually for the program rather than
414	448		21 individually for each contract. The diligent effort shall
415	449		22 include all variable provisions of the program master
416	450		23 policy.
417	451		24 (2) Surplus line producer; license. Any licensed producer
418	452		25 who is a resident of this State, or any nonresident who
419	453		26 qualifies under Section 500-40, may be licensed as a surplus
420	454
421	455
422	456
423	457
424	458
425		-	SB1289 ~~Engrossed~~ - 12 - LRB104 08171 BAB 18220 b
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426	460
427	461
428		-	SB1289 ~~Engrossed~~- 13 -LRB104 08171 BAB 18220 b SB1289 ~~Engrossed~~ - 13 - LRB104 08171 BAB 18220 b
429		-	SB1289 ~~Engrossed~~ - 13 - LRB104 08171 BAB 18220 b
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430	464		1 line producer upon payment of an annual license fee of $400.
431	465		2 A surplus line producer so licensed shall keep a separate
432	466		3 account of the business transacted thereunder for 7 years from
433	467		4 the policy effective date which shall be open at all times to
434	468		5 the inspection of the Director or his representative.
435	469		6 No later than July 21, 2012, the State of Illinois shall
436	470		7 participate in the national insurance producer database of the
437	471		8 NAIC, or any other equivalent uniform national database, for
438	472		9 the licensure of surplus line producers and the renewal of
439	473		10 such licenses.
440	474		11 (3) Taxes and reports.
441	475		12 (a) Surplus line tax and penalty for late payment. The
442	476		13 surplus line tax rate for a surplus line insurance policy
443	477		14 or contract is determined as follows:
444	478		15 (i) 3% for policies or contracts with an effective
445	479		16 date prior to July 1, 2003;
446	480		17 (ii) 3.5% for policies or contracts with an
447	481		18 effective date of July 1, 2003 or later.
448	482		19 A surplus line producer shall file with the Director
449	483		20 on or before February 1 and August 1 of each year a report
450	484		21 in the form prescribed by the Director on all surplus line
451	485		22 insurance procured from unauthorized insurers and
452	486		23 submitted to the Surplus Line Association of Illinois
453	487		24 during the preceding 6 month period ending December 31 or
454	488		25 June 30 respectively, and on the filing of such report
455	489		26 shall pay to the Director for the use and benefit of the
456	490
457	491
458	492
459	493
460	494
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462	496
463	497
464		-	SB1289 ~~Engrossed~~- 14 -LRB104 08171 BAB 18220 b SB1289 ~~Engrossed~~ - 14 - LRB104 08171 BAB 18220 b
465		-	SB1289 ~~Engrossed~~ - 14 - LRB104 08171 BAB 18220 b
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	499	+	SB1289 - 14 - LRB104 08171 BAB 18220 b
466	500		1 State a sum equal to the surplus line tax rate multiplied
467	501		2 by the gross taxable premiums less returned taxable
468	502		3 premiums upon all surplus line insurance submitted to the
469	503		4 Surplus Line Association of Illinois during the preceding
470	504		5 6 months.
471	505		6 Any surplus line producer who fails to pay the full
472	506		7 amount due under this subsection is liable, in addition to
473	507		8 the amount due, for such late fee, penalty, and interest
474	508		9 charges as are provided for under Section 412 of this
475	509		10 Code. The Director, through the Attorney General, may
476	510		11 institute an action in the name of the People of the State
477	511		12 of Illinois, in any court of competent jurisdiction, for
478	512		13 the recovery of the amount of such taxes, late fees,
479	513		14 interest, and penalties due, and prosecute the same to
480	514		15 final judgment, and take such steps as are necessary to
481	515		16 collect the same.
482	516		17 (b) Fire Marshal Tax. Each surplus line producer shall
483	517		18 file with the Director on or before February 1 of each year
484	518		19 a report in the form prescribed by the Director on all fire
485	519		20 insurance procured from unauthorized insurers and
486	520		21 submitted to the Surplus Line Association of Illinois
487	521		22 during the previous year that is subject to tax under
488	522		23 Section 12 of the Fire Investigation Act and shall pay to
489	523		24 the Director the fire marshal tax required thereunder.
490	524		25 (c) Taxes and fees charged to insured. The taxes
491	525		26 imposed under this subsection and the recording fees
492	526
493	527
494	528
495	529
496	530
497		-	SB1289 ~~Engrossed~~ - 14 - LRB104 08171 BAB 18220 b
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498	532
499	533
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501		-	SB1289 ~~Engrossed~~ - 15 - LRB104 08171 BAB 18220 b
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502	536		1 charged by the Surplus Line Association of Illinois may be
503	537		2 charged to and collected from surplus line insureds.
504	538		3 (4) (Blank).
505	539		4 (5) Submission of documents to Surplus Line Association of
506	540		5 Illinois. A surplus line producer shall submit every insurance
507	541		6 contract and premium-bearing endorsement issued under his or
508	542		7 her license to the Surplus Line Association of Illinois for
509	543		8 recording. The submission and recording may be effected
510	544		9 through electronic means. The submission shall set forth:
511	545		10 (a) the name of the insured;
512	546		11 (b) the description and location of the insured
513	547		12 property or risk;
514	548		13 (c) (blank);
515	549		14 (d) the gross premiums charged or returned;
516	550		15 (e) the name of the unauthorized insurer from whom
517	551		16 coverage has been procured;
518	552		17 (f) the kind or kinds of insurance procured; and
519	553		18 (g) amount of premium subject to tax required by
520	554		19 Section 12 of the Fire Investigation Act.
521	555		20 Proposals, endorsements, and other documents which are
522	556		21 incidental to the insurance but which do not affect the
523	557		22 premium charged are exempted from the submission and recording
524	558		23 requirements.
525	559		24 The submission of insuring contracts to the Surplus Line
526	560		25 Association of Illinois constitutes a certification by the
527	561		26 surplus line producer or by the insurance producer who
528	562
529	563
530	564
531	565
532	566
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534	568
535	569
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537		-	SB1289 ~~Engrossed~~ - 16 - LRB104 08171 BAB 18220 b
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538	572		1 presented the risk to the surplus line producer for placement
539	573		2 as a surplus line risk that after diligent effort, where
540	574		3 required, the required insurance could not be procured from
541	575		4 authorized insurers and that such procurement was otherwise in
542	576		5 accordance with the surplus line law.
543	577		6 (6) Evidence of recording required. It shall be unlawful
544	578		7 for an insurance producer to deliver any unauthorized insurer
545	579		8 contract or premium-bearing endorsement unless it contains
546	580		9 evidence of recording by the Surplus Line Association of
547	581		10 Illinois.
548	582		11 (7) Inspection of records. A surplus line producer shall
549	583		12 maintain separate records of the business transacted under his
550	584		13 or her license for 7 years from the policy effective date,
551	585		14 including complete copies of surplus line insurance contracts
552	586		15 maintained on paper or by electronic means, which records
553	587		16 shall be open at all times for inspection by the Director and
554	588		17 by the Surplus Line Association of Illinois.
555	589		18 (8) Violations and penalties. The Director may suspend or
556	590		19 revoke or refuse to renew a surplus line producer license for
557	591		20 any violation of this Code. In addition to or in lieu of
558	592		21 suspension or revocation, the Director may subject a surplus
559	593		22 line producer to a civil penalty of up to $2,000 for each cause
560	594		23 for suspension or revocation. Such penalty is enforceable
561	595		24 under subsection (5) of Section 403A of this Code.
562	596		25 Whenever it appears to the satisfaction of the Director
563	597		26 that a surplus line producer has made a documented good faith
564	598
565	599
566	600
567	601
568	602
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570	604
571	605
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573		-	SB1289 ~~Engrossed~~ - 17 - LRB104 08171 BAB 18220 b
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574	608		1 determination of the home state for a surplus line insurance
575	609		2 contract and has paid the surplus line taxes to a state other
576	610		3 than Illinois, and the Director determines that the producer's
577	611		4 good faith determination was incorrect and the home state is
578	612		5 Illinois, the surplus line producer may, at the discretion of
579	613		6 the Director, be required to submit the contract to the
580	614		7 Surplus Line Association of Illinois and pay applicable taxes
581	615		8 and recording fees, but there shall be no penalty, interest,
582	616		9 or late fee assessed.
583	617		10 (9) Director may declare insurer ineligible. If the
584	618		11 Director determines that the further assumption of risks might
585	619		12 be hazardous to the policyholders of an unauthorized insurer,
586	620		13 the Director may order the Surplus Line Association of
587	621		14 Illinois not to accept and record insurance contracts
588	622		15 evidencing insurance in such insurer and order surplus line
589	623		16 producers to cease procuring insurance from such insurer.
590	624		17 (10) Service of process upon Director. Insurance contracts
591	625		18 delivered under this Section from unauthorized insurers, other
592	626		19 than domestic surplus line insurers as defined in Section
593	627		20 445a, shall contain a provision designating the Director and
594	628		21 his successors in office the true and lawful attorney of the
595	629		22 insurer upon whom may be served all lawful process in any
596	630		23 action, suit or proceeding arising out of such insurance.
597	631		24 Service of process made upon the Director to be valid
598	632		25 hereunder must state the name of the insured, the name of the
599	633		26 unauthorized insurer and identify the contract of insurance.
600	634
601	635
602	636
603	637
604	638
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606	640
607	641
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609		-	SB1289 ~~Engrossed~~ - 18 - LRB104 08171 BAB 18220 b
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610	644		1 The Director at his option is authorized to forward a copy of
611	645		2 the process to the Surplus Line Association of Illinois for
612	646		3 delivery to the unauthorized insurer or the Director may
613	647		4 deliver the process to the unauthorized insurer by other means
614	648		5 which he considers to be reasonably prompt and certain.
615	649		6 (10.5) Required notice to policyholder. Insurance
616	650		7 contracts delivered under this Section from unauthorized
617	651		8 insurers, other than domestic surplus line insurers as defined
618	652		9 in Section 445a, shall have stamped or imprinted on the first
619	653		10 page thereof in not less than 12-pt. bold face type the
620	654		11 following legend: "Notice to Policyholder: This contract is
621	655		12 issued, pursuant to Section 445 of the Illinois Insurance
622	656		13 Code, by a company not authorized and licensed to transact
623	657		14 business in Illinois and as such is not covered by the Illinois
624	658		15 Insurance Guaranty Fund." Insurance contracts delivered under
625	659		16 this Section from domestic surplus line insurers as defined in
626	660		17 Section 445a shall have stamped or imprinted on the first page
627	661		18 thereof in not less than 12-pt. bold face type the following
628	662		19 legend: "Notice to Policyholder: This contract is issued by a
629	663		20 domestic surplus line insurer, as defined in Section 445a of
630	664		21 the Illinois Insurance Code, pursuant to Section 445, and as
631	665		22 such is not covered by the Illinois Insurance Guaranty Fund."
632	666		23 (11) Marine, aviation, and transportation. The Illinois
633	667		24 Surplus Line law does not apply to insurance of property and
634	668		25 operations of railroads or aircraft engaged in interstate or
635	669		26 foreign commerce, insurance of vessels, crafts or hulls,
636	670
637	671
638	672
639	673
640	674
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642	676
643	677
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645		-	SB1289 Engrossed - 19 - LRB104 08171 BAB 18220 b
646		-	1 cargoes, marine builder's risks, marine protection and
647		-	2 indemnity, or other risks including strikes and war risks
648		-	3 insured under ocean or wet marine forms of policies.
649		-	4 (12) Applicability of Illinois Insurance Code. Surplus
650		-	5 line insurance procured under this Section, including
651		-	6 insurance procured from a domestic surplus line insurer, is
652		-	7 not subject to the provisions of the Illinois Insurance Code
653		-	8 other than Sections 123, 123.1, 401, 401.1, 402, 403, 403A,
654		-	9 408, 412, 445, 445a, 445.1, 445.2, 445.3, 445.4, and all of the
655		-	10 provisions of Article XXXI to the extent that the provisions
656		-	11 of Article XXXI are not inconsistent with the terms of this
657		-	12 Act.
658		-	13 (Source: P.A. 102-224, eff. 1-1-22.)
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659	680
660	681
661	682
662	683
663	684
664		-	SB1289 ~~Engrossed~~ - 19 - LRB104 08171 BAB 18220 b
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