An insurer that has been granted a Certificate of Authority by the California Insurance Commissioner to transact insurance in the state is called a(n):

Why B is correct

An admitted insurer, also called an authorized insurer, has obtained a Certificate of Authority from the Commissioner and is permitted to transact insurance in California. Admitted insurers must meet the state's capital, solvency, and conduct requirements and are covered by the state's guaranty associations. A nonadmitted insurer has not been authorized and can be used only through the surplus lines market. The distinction protects consumers by directing business toward regulated, financially supervised companies.

Why the other options are wrong

• A) A nonadmitted insurer lacks the Commissioner's authorization to transact business in the state. A nonadmitted insurer has not received the Commissioner's authorization and is restricted to surplus lines use.
• C) An alien insurer is one formed under the laws of a foreign country. It may still become admitted by meeting California requirements. Alien refers to the insurer's country of formation, and an alien company can still become admitted in California.
• D) Captive describes an agency relationship or a captive insurer owned to insure its owners. It is not the status of an insurer authorized by the Commissioner. Captive describes ownership by the insureds it serves or an agency arrangement, not an authorized status.

Memory hook

Admitted = the Commissioner has let you in the door with a Certificate of Authority.