P&CIllinoismedium
Before placing coverage with an eligible non-admitted insurer under Illinois surplus lines law, an Illinois surplus lines producer is generally required to:
AObtain prior written approval from the IDOI Director for every transaction
BPay a 10% surplus lines tax to IDOI
Document a diligent search showing that admitted insurers declined to write the risk
DPlace the coverage exclusively through the Illinois Insurance Guaranty Fund
Why this is the answer
Section 445 of the Illinois Insurance Code governs surplus lines placements. The licensed surplus lines producer must document a diligent effort — typically declinations from a defined number of admitted carriers writing the class — before placing with an eligible non-admitted insurer. Illinois imposes a surplus lines tax of 3.5% on premiums, not 10%. No prior approval from the Director is required for individual placements, but the eligible insurer must satisfy financial standards. Coverage is not backed by the IIGF.
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