When applying for a license to broker insurance, the bond must be equal to what percentage of the premium brokered the previous year?

In the context of obtaining a license to broker insurance, the requirement for a bond is designed to protect consumers by ensuring that brokers are financially responsible and can meet their obligations. Specifically, the bond required is set at a percentage of the premiums brokered during the previous year. In Illinois, this percentage is established at 5%. This means that if a broker has brought in a significant volume of business, they must provide a bond reflecting 5% of that total premium. This regulatory measure helps maintain the integrity of the insurance market by providing a financial guarantee that brokers will conduct their business ethically and responsibly.

Understanding this requirement also reflects the regulatory framework in place to ensure accountability in the insurance industry. Other percentages mentioned in the options (2%, 10%, and 15%) do not align with the established regulations, indicating a misunderstanding of the specific requirements for securing a license to broker insurance in Illinois. This regulatory standard emphasizes the importance of the bond in safeguarding consumers’ interests.