Before an insurer can operate in a state, what must it possess?

An insurer must possess a Certificate of Authority issued by the state insurance department before it can legally operate in that state. This certificate is a formal approval that allows an insurance company to conduct business, ensuring that it meets the regulatory requirements set forth by state laws. The issuance of this certificate is a critical step, as it verifies that the insurer is financially stable, compliant with state regulations, and qualified to provide the specific types of insurance it intends to sell.

While a license to operate might seem relevant, the Certificate of Authority is the specific legal document that grants insurers the ability to transact business in a state. Other potential documents, like an Insurance Compliance Document or an Insurance Guarantee Letter, are not standard requirements for legal operation and do not serve as the primary means of authorizing an insurer to function within a jurisdiction. Hence, the requirement for a Certificate of Authority is essential for ensuring consumer protection and maintaining the integrity of the insurance market within the state.