An insurer that holds a certificate of authority issued by the California Insurance Commissioner to transact insurance in this state is called:

Why A is correct

An admitted insurer is one that has been granted a certificate of authority by the California Insurance Commissioner, authorizing it to transact insurance in the state and making it subject to the Commissioner's regulation and to the protections of the state's guaranty fund system. Insurers must be admitted to sell through licensed agents in the ordinary market. A nonadmitted insurer lacks that certificate; surplus lines insurers are nonadmitted insurers accessed only through the surplus line market, and a captive insurer is one owned by the risk it insures. The certificate of authority is the definitive mark of admission, and an agent's authority to place business depends on the insurer holding it.

Why the other options are wrong

• B) A nonadmitted insurer has not been granted a certificate of authority in California and is restricted from the ordinary admitted market, accessible only through surplus lines. The certificate of authority is the sole evidence of admission, and without it the insurer may only be reached through the surplus line market.
• C) Surplus lines describes how a nonadmitted insurer is accessed — through licensed surplus line brokers when coverage is unavailable from admitted insurers — not admission itself. Surplus lines is a regulated channel of access, not a status of the insurer, and it is available only when coverage cannot be obtained from admitted insurers.
• D) A captive insurer is a company owned by those it insures, formed to cover their own risks; it is an ownership structure, not a description of admission status. A captive insurer's ownership ties it to the risks it covers, which is a different concept from whether it is admitted in a given state.

Memory hook

Admitted = the Commissioner's stamp of approval to do business in California.