P&CIllinoishard
Under Article VIIIA of the Illinois Insurance Code (215 ILCS 5/Article VIIIA), an Illinois-domiciled captive insurance company is best characterized as:
AAn insurer that may freely write personal auto and homeowners insurance for the general public
BA reinsurer that may not assume any direct insurance risk
A specialized insurer formed primarily to insure the risks of its parent and affiliated companies, subject to IDOI captive licensing requirements
DA surplus lines broker authorized to place coverage with non-admitted insurers
Why this is the answer
Article VIIIA of the Illinois Insurance Code authorizes captive insurance companies. Illinois recognizes pure captives (insuring only their parent and affiliates), association captives (insuring members of a sponsoring association), industrial insured captives (insuring large industrial members), and special-purpose captives. Captives are licensed by the IDOI with capital and surplus thresholds, examination, and reporting tailored to the captive structure. They are commonly used by mid-to-large companies to retain and manage their own risks, access reinsurance, and obtain tax and underwriting efficiencies.
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