If an insurer holds a Certificate of Authority, it is known as what type of insurer?

• A. Authorized or Admitted
• B. Nonadmitted
• C. Reinsurer
• D. Surplus Lines

Answer: (A)

Holding a Certificate of Authority means the insurer is authorized to transact insurance in the state. That term is commonly described as an admitted or authorized insurer. Admitted carriers are regulated by the state, must file and obtain approval for their rates and policy forms, and participate in state guaranty funds to protect policyholders if the company fails. Nonadmitted indicates a lack of this authorization, used only in special cases when admitted carriers won’t cover a risk, typically via surplus lines. Reinsurers provide coverage to other insurers rather than to the public, so COA status isn’t what defines a reinsurer. Surplus lines refer to coverage placed with nonadmitted insurers when the risk isn’t available from admitted markets. In short, a certificate of authority identifies an insurer as authorized or admitted.