SB 1289 — INS: Surplus Line "Home State" (Public Act 104‑0091)
Status and key dates
- Bill number: SB 1289
- Public Act: 104‑0091
- Enacted by Illinois General Assembly; Governor approved: August 1, 2025
- Effective date: January 1, 2026
- Companion: HB 3315
Purpose / Intent
- To amend Section 445 of the Illinois Insurance Code (surplus line provisions) by revising and clarifying definitions and rules that determine an insured's "home state" for surplus (non‑admitted) insurance placements and to make related conforming changes. The change is intended to clarify which state exercises regulatory oversight and which state’s surplus line tax rules apply for multi‑state and multi‑insured placements.
Main provisions and changes
- Revises the definition of “home state”:
- Primary rule: the state where the insured maintains its principal place of business (or an individual’s principal residence).
- Alternative: if 100% of the insured risk is located outside that state, the home state is the state to which the greatest percentage of the insured’s taxable premium for that contract is allocated.
- For multiple named insureds:
- If multiple insureds are members of an affiliated group on one surplus line contract, the home state is that of the affiliated group member with the largest percentage of premium under the contract.
- If multiple named insureds are not affiliated and each pays 100% of its own premium from its own funds, each member’s coverage is treated as a separate surplus line contract with its own home state; otherwise the group’s home state rule applies.
- Retains and restates many other surplus line definitions and programmatic terms (e.g., affiliate/affiliated group, master policy, multi‑state risk, program business).
- Reaffirms definition of “premium” (amounts designated as premium; excludes taxes, the Surplus Line Association of Illinois recording fee, and other fees).
- Restates and preserves the “exempt commercial purchaser” criteria and numeric thresholds:
- Aggregate nationwide commercial P&C premiums paid in prior 12 months: > $100,000.
- Net worth threshold: > $20,000,000 (adjusted every 5 years by CPI).
- Annual revenue threshold: > $50,000,000 (CPI‑adjusted).
- Not‑for‑profit/public entity budgeted expenditures: ≥ $30,000,000 (CPI‑adjusted).
- Employee thresholds: >500 employees (or >1,000 aggregated for affiliated group).
- Municipality: population >50,000.
- Keeps CPI‑adjustment schedule: amounts indexed every 5 years (next adjustment schedule language retained).
Who is affected
- Surplus line producers (brokers) and non‑admitted (unauthorized) insurers that write surplus line business for Illinois risks.
- Insureds with multi‑state exposures, master policies, program business, and multi‑insured contracts—especially affiliated groups and large commercial purchasers.
- State regulators and tax authorities (allocation of surplus line premium, regulatory jurisdiction, reporting and filing responsibilities).
- Surplus Line Association of Illinois and parties involved in surplus line recording and fee collection.
Practical impact and considerations
- Clarifies which state is treated as the “home state” for surplus placements, affecting:
- Which state’s surplus line tax and premium allocation rules apply.
- Which state’s regulatory requirements and oversight apply to a placement.
- Likely reduces ambiguity in multi‑insured and multi‑state placements, potentially simplifying compliance for brokers and reducing disputes over tax allocation and regulatory jurisdiction.
- Brokers should review their placement, filing and premium allocation practices, and update procedures and documentation (e.g., declarations pages and premium allocations) to reflect the revised home state rules.
- Large commercial purchasers and program administrators should assess how the new language affects master policies, affiliated group placements, and aggregated premium reporting.
Notes
- Summary focuses on the Illinois enactment (Public Act 104‑0091). The source document contained other state bill texts (Arizona, Hawaii) and multiple versions; this summary covers the Illinois statute change as enacted.
