What must an insurer be to legally operate in a state?

To legally operate in a state, an insurer must be authorized with a Certificate of Authority. This certificate is a form of official approval granted by the state’s insurance department, which verifies that the insurer meets certain standards and regulations established by state law. The Certificate of Authority ensures that the insurer has the necessary financial resources, business practices, and compliance with the law to offer insurance products within that jurisdiction. This requirement protects consumers by ensuring that only qualified companies are allowed to conduct business in the state.

The necessity for a marketing strategy is not a legal requirement for operation; rather, it is a business consideration that may affect an insurer's success. Being referred to as a domestic insurer pertains to the insurer's location relative to the state in which it operates, but it is not a stipulation for legal operation statewide. Additionally, while providing competitive rates may be important for market viability, it is not a legal requirement for an insurer to operate in a state.