What document is required for an insurance company to transact insurance?

• A. Certificate of Authority
• B. Insurance License
• C. Agency License
• D. Broker Permit

Answer: (A)

The key idea here is that a company must be officially authorized by the state to operate as an insurer before it can transact insurance. That formal authorization is evidenced by a Certificate of Authority. It shows the insurer has met the state's regulatory requirements, such as financial solvency, reserves, and other ongoing compliance, and it grants the right to issue policies, collect premiums, and handle claims.

The other documents are tied to individuals or to agencies, not to the insurer itself. An insurance license is for a person to sell or service insurance; an agency license covers an agency’s ability to operate; a broker permit is for a broker. None of these alone authorize a company to transact insurance across its operations.