What is a 'Domestic Surplus Line
A Domestic Surplus Line Insurer is an insurer that is specially
licensed under the Domestic Surplus
Line Insurer Law (Section 445a) of the Illinois Insurance Code.
It is domiciled in Illinois but, unlike all other Illinois-domiciled
insurers, can write surplus line policies in Illinois.
U.S. based insurers are always licensed by their state of
domicile. Prior to the inception of this law, a U.S. based surplus
line insurer had to operate on a licensed, admitted basis in its state of
domicile. Therefore, if an insurer wanted to write surplus line
contracts in all fifty states, two companies had to be created and
capitalized. For example, a primary insurance company would be
domiciled in Illinois to write policies in 49 states (all states except
Illinois), and a secondary insurance company had to be created and
capitalized (domiciled in a different state) just to write surplus line
policies in Illinois. This is a waste of capital and an inefficiency
of the surplus line insurance system in the U.S. Illinois recognized
this with the creation of the Domestic
Surplus Line Insurer Law.
For a list of Frequently Asked Questions regarding Domestic Surplus
Line Insurers, see Bulletin 16.
For a list of insurers currently registered as Domestic Surplus Line
Insurers, see Bulletin 16a.
now several other states that allow for Domestic Surplus
Line Insurer status including Arkansas, Delaware, New
Hampshire, New Jersey and Oklahoma.
The materials and information contained herein are only synopses of laws,
regulations and other information and do not constitute legal advice. It is
recommended that you consult your legal advisers regarding application of
state and federal laws and regulations to any particular situation. The
Surplus Line Association does not undertake and hereby disclaims any
obligation to advise you of any change to laws and
regulations or the procedures of the Surplus Line Association.