Introduction
The Surplus Line Association of Illinois (SLAI) is an organization comprising all licensed Illinois surplus line insurance producers. Surplus line producers are agents and brokers who hold a special license from the Illinois Department of Insurance allowing them, under certain conditions, to procure policies from insurers that are not licensed in this state.
Created by statute in 1985, the Association acts as a liaison between the Department and surplus line producers. The SLAI is a self-funded body that is charged with the duty to educate the marketplace in order to facilitate and encourage compliance with the surplus line law, accept filings from surplus line producers, report data to the Department of Insurance, and provide other services to its members that are incidental or related to the purposes of the Association.
The SLAI plays an essential role in protecting Illinois policyholders by collecting, compiling and providing to the Department of Insurance vital marketplace information and by educating surplus line producers and assisting them in complying with the law.
History of the SLAI |
Prior to the existence of the Surplus Line Association, the Department of Insurance of Illinois was directly involved with all the steps necessary to file surplus line business. The Department provided the producers a list of surplus line carriers they were permitted to use. Each producer or firm was required to file a monthly risk affidavit with the Department of Insurance. This affidavit covered the transactions of the previous month, listing the name and location of the insured, amount of coverage, gross premium, name of the surplus line carrier and type of coverage. In addition, each producer or firm was required to remit the surplus line tax and the appropriate forms on a semi-annual basis in February and August.
During the early 1980's, a prominent law firm approached the Department of Insurance to propose the development of a surplus line association or a stamping office. The intent behind this proposal was to create a self-regulated, self-funded body which would consolidate all the reporting to the Department of Insurance on behalf of the brokerage community. While the regulatory responsibility would remain with the state, the Aassociation would report the collected data to the Department of Insurance on a monthly basis replacing all the monthly reports previously provided by individual producers and firms to the Department. This would free the Department from much time consuming administrative work and would enable them to concentrate their resources on regulatory matters.
On December 27, 1984, the Director of Insurance appointed a five member Implementation Task Force of prominent surplus line producers. The task force met for the first time early in 1985 to discuss operating procedures, staff size, office space, budget needs and other important issues.
At the same time, a draft bill was submitted to the Insurance Committee of the Illinois Legislature by the Department of Insurance. The bill was then presented formally to the House and Senate. A number of surplus line producers were asked to testify before legislative committees during the deliberation process. The culmination of all these activities was on February 27, 1985, when the bill creating the new Surplus Line Association was signed into law.
A Board of Directors for the Surplus Line Association was elected by the Illinois surplus line producers. On April 30, 1985, the first Board of Directors meeting was held. The first act of the board was to review the recommendations of the Implementation Task Force and approve the various steps needed to begin, which included instituting procedures, establishing a Plan of Operation, adopting a budget, determining staff needs and making other necessary operational decisions.
The Surplus Line Association then set up quarters at 230 West Monroe in Chicago in late June, 1985, and began operations as planned on July 1, 1985. The Association relocated to 100 S. Wacker Drive in July, 2000 and moved to its current location at 222 S. Riverside Plaza in July, 2015.
Services of the SLAI |
The Surplus Line Association of Illinois provides direct services to its members and to the Illinois Department of Insurance.
For its members, the Association provides filing services, tax forms, continuing education classes, procedures workshops and is the primary point of contact for information regarding compliance issues for the Illinois surplus line marketplace.
For the Department of Insurance, the Association provides marketplace, producer and insurer data and information. The Association relieves the DOI from the burdensome task of collecting and compiling this market data without spending tax revenues.
In addition, certain services are prescribed by statute. The Illinois Insurance Code states that the Association shall be authorized and have the duty to:
- receive and record all surplus line insurance contracts which surplus line producers are required to file with the Association under subsection (5) of Section 445;
- prepare monthly reports for the Director on surplus line insurance procured by its members during the preceding month in such form and providing such information as the Director may prescribe;
- prepare and deliver to each licensee and to the Director the reports of surplus line business prescribed in subsection (3) of Section 445;
- assess its members for costs of operations in accordance with a schedule adopted by the Board of Directors of the Association and approved by the Director;
- employ and retain such persons as are necessary to carry out the duties of the Association;
- borrow money as necessary to effect the purposes of the Association;
- enter contracts as necessary to effect the purposes of the Association;
- perform such other acts as will facilitate and encourage compliance by its members with the surplus line law of this State and rules promulgated thereunder; and
- provide such other services to its members as are incidental or related to the purposes of the Association.