What term describes an insurer that is authorized or admitted to transact insurance in a state?

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

Answer: (A)

Being authorized or admitted means the insurer has a certificate of authority from the state’s department of insurance, allowing it to transact insurance there. This status shows the company has met the state’s standards for solvency, submitted and approved policy forms and rates, and will be regulated by the state, with its business typically protected by the state guaranty fund if the insurer fails. In contrast, nonadmitted insurers lack this authority in the state (though they may write certain risks through surplus lines), unauthorized means they are not licensed to write insurance there at all, and surplus lines describe the market for placing coverage with nonadmitted carriers when admitted carriers won’t cover a risk.