Sole Source Justification Form

Version 7.01 Page 1 of 8

Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: Insurance/Procurement

Need Identified Date: Jan 1, 2026 Supply/Service Need By Date: May 1, 2026

Project Title: NAIC - Annual Membership Dues FY26

Vendor: National Association of Insurance Commissioners

Provide a description of the supplies or services required: NAIC Annual membership from 05/01/2026 - 04/30/2027.

Value: Actual Value of Initial Term, this Change Order or Amendment: 110,800

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Source

Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: May 1, 2026

Estimated Contract End Date: Apr 30, 2027

Number of Potential Renewals:

Length of Each Renewal in Months:

Total Value of All Renewals:

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Organizational Memberships (Dues, Fees, Conference Charges Including Mandated Travel and Related Expenses

Are there secondary justification(s) for this sole source? Yes No

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 05/01/2019 04/30/2020 87,716 Membership Dues P-12026 Small Purchase

2 05/01/2020 04/30/2021 86,309 Membership Dues P-16208 Small Purchase

3 05/01/2021 04/30/2022 88,481 Membership Dues P-28047 Small Purchase

4 05/01/2022 04/30/2023 89,127 Membership Dues P-34155 Small Purchase

5 05/01/2023 04/30/2024 91,067 Membership Dues P-61787 Small Purchase

6 05/01/2024 04/30/2025 89,835 Membership Dues P-74211 Small Purchase

7 05/01/2025 04/30/2026 111,338 Membership Dues P-79640 Sole Source

If more than 10, or if other comments, explain:

Section VI - Business Rationale

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

1. Provide a detailed explanation of the need for the supplies or services:

Membership in the National Association of Insurance Commissioners (NAIC) is essential to the Illinois Department of Insurance’s ability to effectively regulate the insurance marketplace.

First, NAIC accreditation ensures that Illinois’ licensure and financial regulation of domestic insurers including two of the nation’s largest insurers, Allstate and State Farm are formally recognized and relied upon by all other states and U.S. jurisdictions. This reciprocal recognition allows Illinois-domiciled insurers to operate nationwide without being subject to redundant financial examinations in every state. Maintaining this status is critical to preserving Illinois’ standing as a leading insurance regulatory jurisdiction and commercial hub.

Second, NAIC membership allows Illinois to rely on the licensure, accreditation, and financial solvency oversight conducted by other states for approximately 1,000 foreign (non-domestic) insurers operating in Illinois. This reliance framework eliminates the need for duplicative financial examinations and parallel regulatory reviews, significantly reducing administrative burden and taxpayer expense while maintaining strong consumer protection through a nationally coordinated regulatory system.

From a resource perspective, the Department currently maintains fewer than 50 financial analysts responsible for overseeing approximately 470 domestic insurers. NAIC accreditation allows the Department to focus its financial examination authority on these domestic entities while leveraging coordinated oversight of foreign insurers conducted by other states. Without NAIC membership, the Department would be required to independently examine and regulate an additional 1,000 insurers. This would necessitate at least a threefold increase in professional regulatory staff, along with significant associated costs for salaries, training, examination infrastructure, technology systems, and administrative support. Such expansion would materially increase State expenditures and reduce operational efficiency.

In summary, NAIC membership is not discretionary; it is foundational to:

• Preserving Illinois’ authority as a nationally recognized insurance regulatory jurisdiction

• Protecting approximately 300,000 insurance-related jobs

• Avoiding duplicative and costly regulatory examinations

• Maintaining efficient allocation of limited Department resources

• Ensuring continued multistate market access for Illinois-domiciled insurers

Continued investment in NAIC membership directly supports regulatory efficiency, economic stability, consumer protection, and fiscal responsibility for the State of Illinois.

2. Provide a list and describe in detail the specifications required to satisfy the need:

NAIC Membership Continuity and Requirements

• Illinois has been a member of the National Association of Insurance Commissioners (NAIC) for more than ten years, with membership renewed annually.

• There have been no new or additional specifications required for continued participation; the requirements remain unchanged.

• The vendor must support nationwide reliance on Illinois’ licensing of domestic insurers, ensuring acceptance by other states.

• The vendor must enable Illinois to rely on other states’ regulatory oversight of foreign insurers, eliminating the need for duplicative examinations.

• The vendor must allow licensing and regulatory functions to be performed efficiently with limited staffing and resources.

• The vendor must reduce duplicative regulatory efforts, thereby lowering costs for insurers.

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

The National Association of Insurance Commissioners (NAIC) is the only nationally recognized accreditation authority for state insurance regulators in the United States. Its Financial Regulation Standards and Accreditation Program establishes the uniform solvency oversight standards upon which all states rely. There is no alternative accreditation body that provides reciprocal regulatory recognition among states.

Continued NAIC membership is therefore essential to maintain Illinois’ accredited status, preserve interstate reliance on the Department’s financial examinations, and allow the Department to rely on other states’ accredited oversight of foreign insurers.

Without NAIC accreditation, the Department would lose regulatory reciprocity, face significant operational and staffing burdens, and risk material disruption to the State’s insurance marketplace and economic base.

• Model Laws and Regulations: NAIC develops model laws, regulations, and guidelines that member states may adopt, ensuring consistency and uniformity across the insurance industry.

• Multi-state Licensing: NAIC enables mutual recognition of licenses, allowing insurance companies to operate in multiple states without the need to obtain separate licenses in each jurisdiction.

• Coordinated Examinations: NAIC facilitates coordinated examinations among states, allowing Illinois to rely on examinations conducted by other states and reducing duplication and regulatory costs.

• Financial Surveillance: NAIC provides financial analysis tools and reports that assist regulators in monitoring the financial condition of insurers and identifying potential solvency risks.

• Consumer Protections: NAIC supports the development of consumer protection standards to ensure insurers meet high levels of financial responsibility and operational transparency.

• Legal and Regulatory Expertise: NAIC provides access to legal resources, regulatory guidance, and expert analysis to support compliance with state and federal laws.

• Training and Education: NAIC delivers training and educational resources for regulators and industry professionals to remain current on regulatory developments and best practices.

• Regulatory Updates and Alerts: NAIC provides timely updates and alerts regarding regulatory changes, market trends, and federal mandates impacting the insurance industry.

• Resource Pooling: NAIC coordinates regulatory activities across states, enabling more efficient use of resources and reducing the need for additional staffing at the state level.

• Reducing Redundancy: NAIC supports mutual recognition of licenses and reliance on examinations conducted by other states, reducing duplicative regulatory efforts and lowering costs for insurers.

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

• The National Association of Insurance Commissioners (NAIC) is unique in that all 50 states, the District of Columbia, and Puerto Rico are currently accredited under its program.

• Without NAIC membership, the existing system of state-based insurance regulation relied upon nationwide would require a complete and costly overhaul, resulting in significant taxpayer expense and substantial economic impact to the State of Illinois.

• This procurement qualifies as a sole-source procurement because NAIC is the only organization that accredits state insurance departments, including the Illinois Department of Insurance (DOI), as insurance regulators.

• Through NAIC accreditation, the DOI is authorized to regulate insurance companies domiciled in Illinois and other states and to issue Certificates of Authority permitting those companies to conduct insurance business in Illinois.

• Illinois currently regulates approximately 470 domestic insurance companies and oversees more than 1,000 foreign insurance companies operating within the state’s market.

• NAIC is the only entity that identifies and maintains nationally consistent financial regulatory standards and core responsibilities for state insurance regulators, improving oversight of multi-state insurers and reducing regulatory inefficiencies ultimately borne by policyholders.

• NAIC accreditation standards are developed through an extensive, transparent process that includes broad participation by state insurance commissioners and a formal peer-review component to ensure continued adherence to best practices.

• The NAIC Accreditation Program promotes uniformity, accountability, and excellence among state insurance departments, ensuring they remain effective and internationally respected regulatory bodies.

• The Accreditation Program is a cornerstone of the state-based system of insurance regulation and serves as a critical safeguard against federal intervention that could result from regulatory inconsistency among states.

• The strength and effectiveness of NAIC accreditation has long been recognized as a defining feature of the success of the United States’ state-based insurance regulatory framework.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

5a. If no, why weren't alternatives evaluated?

There is no alternative vendor/suppliers that could meet the need mention in part 3.

6. Are there resellers or distributors?

Yes No N/A

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

NAIC membership fees are established through a standardized and transparent assessment methodology applied uniformly across all member jurisdictions and are not subject to negotiation. Because there is no alternative provider for NAIC accreditation and services, pricing is evaluated based on consistency, methodology, and overall value rather than competitive bidding. The Department reviewed the assessment methodology and supporting documentation and determined the price to be fair and reasonable.

Membership fees are calculated based on total direct written premiums by companies domiciled in each jurisdiction, with Illinois’ assessment reflecting its proportional share of national premium volume and changes in premiums written. While the NAIC implemented an average base budget increase to address rising operational and infrastructure costs, the final membership cost for the current fiscal year was reduced by $538 from the prior projection. The Department determined that the final cost remains fair and reasonable given the uniform application of the assessment formula and the comprehensive regulatory services and accreditation benefits provided through NAIC membership.

Version 7.01 Page 6 of 8

Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

8a. If yes, please provide details regarding future obligations and/or needs:

NAIC provides training for both insurance regulators and industry professionals to ensure they remain current on regulatory developments and industry best practices. As part of NAIC membership, the Department receives a significant membership discount approximately 50 percent on Teammate software licenses, which is the system used by the Department’s insurance regulators. NAIC also provides comprehensive training for the Teammate software through both in-person and online formats, allowing for flexibility based on operational needs. At this time, NAIC membership and the associated Teammate software licenses are the only recurring purchases the Department is obligated to make with this vendor on an annual basis.

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

If Illinois were not an NAIC-accredited member, other states would no longer be obligated to recognize Illinois’ regulatory oversight. As a result, insurers would likely be inclined to relocate to accredited jurisdictions to avoid operational barriers, jeopardizing Illinois’ status as a premier insurance domicile. The Illinois insurance industry supports approximately 300,000 jobs statewide. Loss of domestic insurer status for major carriers could materially impact employment, premium tax revenue, and the broader economic ecosystem supported by the insurance sector.

Loss of accreditation from the National Association of Insurance Commissioners (NAIC) would eliminate the Department’s ability to rely on and receive reciprocal reliance from other states for financial solvency oversight. Other jurisdictions would no longer be required to accept this Department’s examinations of domestic insurers, resulting in duplicative regulatory requirements and increased compliance burdens for Illinois-domiciled companies.

Loss of accreditation would also jeopardize Illinois’ status as a premier insurance domicile, potentially prompting insurers including major domestic carriers to relocate to accredited states. This would risk significant loss of premium tax revenue, regulatory authority, and insurance-related employment within the State.

Additionally, the Department could face substantial operational and fiscal impacts, including the need to conduct expanded independent oversight of foreign insurers and increase staffing and examination resources. Continued NAIC accreditation is therefore essential to maintaining regulatory reciprocity, economic stability, and cost-effective solvency oversight.

10. Is there any additional information you would like to add to justify this sole source?

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Feb 24, 2026

Printed Name Amin Ouzidane E-mail Address amin.ouzidane@illinois.gov

Phone Number 217-836-6433

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address michael.underwood@illinois.gov

Phone Number 217-557-5661 Date Mar 2, 2026

Printed Name Michael Underwood

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number Date Mar 2, 2026

Printed Name Dereck Reeves E-mail Address dereck.reeves@illinois.gov

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Bulletin Reference Number 26-446DOI-FINAD-B-51257

Requesting Agency/University The Department of Insurance

Sole Source Justification Form - Part II Section I - General Information

Project Title NAIC - Annual Membership Dues FY26

Vendor National Association of Insurance Commissioners

Initial Date of Procurement Bulletin Posting

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone

Printed Name Date

CPO E-mail

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229

First, NAIC accreditation ensures that Illinois’ licensure and financial regulation of domestic insurers including two of the nation’s largest insurers, Allstate and State Farm are formally recognized and relied upon by all other states and U.S. jurisdictions. This reciprocal recognition allows Illinois-domiciled insurers to operate nationwide without being subject to redundant financial examinations in every state. Maintaining this status is critical to preserving Illinois’ standing as a leading insurance regulatory jurisdiction and commercial hub.

Second, NAIC membership allows Illinois to rely on the licensure, accreditation, and financial solvency oversight conducted by other states for approximately 1,000 foreign (non-domestic) insurers operating in Illinois. This reliance framework eliminates the need for duplicative financial examinations and parallel regulatory reviews, significantly reducing administrative burden and taxpayer expense while maintaining strong consumer protection through a nationally coordinated regulatory system.

From a resource perspective, the Department currently maintains fewer than 50 financial analysts responsible for overseeing approximately 470 domestic insurers. NAIC accreditation allows the Department to focus its financial examination authority on these domestic entities while leveraging coordinated oversight of foreign insurers conducted by other states. Without NAIC membership, the Department would be required to independently examine and regulate an additional 1,000 insurers. This would necessitate at least a threefold increase in professional regulatory staff, along with significant associated costs for salaries, training, examination infrastructure, technology systems, and administrative support. Such expansion would materially increase State expenditures and reduce operational efficiency.

In summary, NAIC membership is not discretionary; it is foundational to:

• Preserving Illinois’ authority as a nationally recognized insurance regulatory jurisdiction

• Protecting approximately 300,000 insurance-related jobs

• Avoiding duplicative and costly regulatory examinations

• Maintaining efficient allocation of limited Department resources

• Ensuring continued multistate market access for Illinois-domiciled insurers

Continued investment in NAIC membership directly supports regulatory efficiency, economic stability, consumer protection, and fiscal responsibility for the State of Illinois.

Q2Answer: NAIC Membership Continuity and Requirements

• Illinois has been a member of the National Association of Insurance Commissioners (NAIC) for more than ten years, with membership renewed annually.

• There have been no new or additional specifications required for continued participation; the requirements remain unchanged.

• The vendor must support nationwide reliance on Illinois’ licensing of domestic insurers, ensuring acceptance by other states.

• The vendor must enable Illinois to rely on other states’ regulatory oversight of foreign insurers, eliminating the need for duplicative examinations.

• The vendor must allow licensing and regulatory functions to be performed efficiently with limited staffing and resources.

• The vendor must reduce duplicative regulatory efforts, thereby lowering costs for insurers.

Q3Answer: The National Association of Insurance Commissioners (NAIC) is the only nationally recognized accreditation authority for state insurance regulators in the United States. Its Financial Regulation Standards and Accreditation Program establishes the uniform solvency oversight standards upon which all states rely. There is no alternative accreditation body that provides reciprocal regulatory recognition among states.

Continued NAIC membership is therefore essential to maintain Illinois’ accredited status, preserve interstate reliance on the Department’s financial examinations, and allow the Department to rely on other states’ accredited oversight of foreign insurers. Without NAIC accreditation, the Department would lose regulatory reciprocity, face significant operational and staffing burdens, and risk material disruption to the State’s insurance marketplace and economic base.

• Model Laws and Regulations: NAIC develops model laws, regulations, and guidelines that member states may adopt, ensuring consistency and uniformity across the insurance industry.

• Multi-state Licensing: NAIC enables mutual recognition of licenses, allowing insurance companies to operate in multiple states without the need to obtain separate licenses in each jurisdiction.

• Coordinated Examinations: NAIC facilitates coordinated examinations among states, allowing Illinois to rely on examinations conducted by other states and reducing duplication and regulatory costs.

• Financial Surveillance: NAIC provides financial analysis tools and reports that assist regulators in monitoring the financial condition of insurers and identifying potential solvency risks.

• Consumer Protections: NAIC supports the development of consumer protection standards to ensure insurers meet high levels of financial responsibility and operational transparency.

• Legal and Regulatory Expertise: NAIC provides access to legal resources, regulatory guidance, and expert analysis to support compliance with state and federal laws.

• Training and Education: NAIC delivers training and educational resources for regulators and industry professionals to remain current on regulatory developments and best practices.

• Regulatory Updates and Alerts: NAIC provides timely updates and alerts regarding regulatory changes, market trends, and federal mandates impacting the insurance industry.

• Resource Pooling: NAIC coordinates regulatory activities across states, enabling more efficient use of resources and reducing the need for additional staffing at the state level.

• Reducing Redundancy: NAIC supports mutual recognition of licenses and reliance on examinations conducted by other states, reducing duplicative regulatory efforts and lowering costs for insurers.

Q4Answer: • The National Association of Insurance Commissioners (NAIC) is unique in that all 50 states, the District of Columbia, and Puerto Rico are currently accredited under its program.

• Without NAIC membership, the existing system of state-based insurance regulation relied upon nationwide would require a complete and costly overhaul, resulting in significant taxpayer expense and substantial economic impact to the State of Illinois.

• This procurement qualifies as a sole-source procurement because NAIC is the only organization that accredits state insurance departments, including the Illinois Department of Insurance (DOI), as insurance regulators.

• Through NAIC accreditation, the DOI is authorized to regulate insurance companies domiciled in Illinois and other states and to issue Certificates of Authority permitting those companies to conduct insurance business in Illinois.

• Illinois currently regulates approximately 470 domestic insurance companies and oversees more than 1,000 foreign insurance companies operating within the state’s market.

• NAIC is the only entity that identifies and maintains nationally consistent financial regulatory standards and core responsibilities for state insurance regulators, improving oversight of multi-state insurers and reducing regulatory inefficiencies ultimately borne by policyholders.

• NAIC accreditation standards are developed through an extensive, transparent process that includes broad participation by state insurance commissioners and a formal peer-review component to ensure continued adherence to best practices.

• The NAIC Accreditation Program promotes uniformity, accountability, and excellence among state insurance departments, ensuring they remain effective and internationally respected regulatory bodies.

• The Accreditation Program is a cornerstone of the state-based system of insurance regulation and serves as a critical safeguard against federal intervention that could result from regulatory inconsistency among states.

• The strength and effectiveness of NAIC accreditation has long been recognized as a defining feature of the success of the United States’ state-based insurance regulatory framework.

Membership fees are calculated based on total direct written premiums by companies domiciled in each jurisdiction, with Illinois’ assessment reflecting its proportional share of national premium volume and changes in premiums written. While the NAIC implemented an average base budget increase to address rising operational and infrastructure costs, the final membership cost for the current fiscal year was reduced by $538 from the prior projection. The Department determined that the final cost remains fair and reasonable given the uniform application of the assessment formula and the comprehensive regulatory services and accreditation benefits provided through NAIC membership.

Loss of accreditation from the National Association of Insurance Commissioners (NAIC) would eliminate the Department’s ability to rely on and receive reciprocal reliance from other states for financial solvency oversight. Other jurisdictions would no longer be required to accept this Department’s examinations of domestic insurers, resulting in duplicative regulatory requirements and increased compliance burdens for Illinois-domiciled companies.

Loss of accreditation would also jeopardize Illinois’ status as a premier insurance domicile, potentially prompting insurers including major domestic carriers to relocate to accredited states. This would risk significant loss of premium tax revenue, regulatory authority, and insurance-related employment within the State.

Additionally, the Department could face substantial operational and fiscal impacts, including the need to conduct expanded independent oversight of foreign insurers and increase staffing and examination resources. Continued NAIC accreditation is therefore essential to maintaining regulatory reciprocity, economic stability, and cost-effective solvency oversight.