What is the main regulatory body governing surplus lines in most states?

The main regulatory body governing surplus lines in most states is each state's Department of Insurance. Each state has its own Department of Insurance responsible for overseeing the insurance marketplace, including the regulation of surplus lines. This agency ensures that the surplus lines market operates within the framework of state laws and regulations, providing oversight to protect consumers and maintain market integrity.

The Department establishes standards for licensing surplus lines brokers and ensures compliance with state laws regarding the placement of insurance that cannot be obtained from authorized insurers. This state-level regulatory approach allows for more tailored oversight that reflects the unique needs and circumstances of the local insurance market.

While the other choices represent important organizations and agencies, they do not serve as the primary regulatory body for surplus lines. The Federal Insurance Agency plays a limited role, mainly related to federal insurance programs rather than day-to-day market regulation. The National Association of Insurance Commissioners (NAIC) provides guidance and model laws but does not have regulatory authority over states. The Surplus Lines Association is an industry group that supports brokers and insurers in the surplus lines market but does not have regulatory power. Thus, each state's Department of Insurance is indeed the correct answer for the regulatory body overseeing surplus lines.