State RegulationsIL specificDifficulty 3/5
A producer who places business without an agency contract has brokered a rapidly growing volume of premiums. Under 215 ILCS 5/500-130, what limit applies to the required bond amount?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
215 ILCS 5/500-130 caps the bond at $50,000 in the aggregate. The formula is the greater of $2,500 or 5% of the previous calendar year's brokered premiums, but that computation never pushes the required bond above $50,000. A producer with a very large brokered volume therefore knows the maximum surety protection required, even as the business keeps growing.
Why the other options are wrong
- A) Wrong because 215 ILCS 5/500-130 sets an explicit aggregate maximum on the required bond.
- B) $2,500 is the minimum floor of the bond formula in 215 ILCS 5/500-130, not the maximum.
- D) $300,000 is a life-insurance guaranty-association benefit figure, not a producer-bond cap.
Memory hook
Floor $2,500, ceiling $50,000.