State RegulationsAZ specificDifficulty 2/5
An insurer organized in another state wants to sell life insurance to Arizona residents. What does it need before it may transact that business in Arizona?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-217(A) applies to insurers transacting business in Arizona, whether organized in Arizona or elsewhere. A foreign (out-of-state) insurer must obtain a certificate of authority from the Director of the Arizona Department of Insurance and Financial Institutions before selling to Arizona residents; its home state license alone does not reach across the border.
Why the other options are wrong
- A) Wrong because a home state license authorizes business only in that state; Arizona requires its own certificate of authority under A.R.S. 20-217(A).
- C) Wrong because a producer's sponsorship is not a credential for the insurer; the certificate of authority from the Director is required under A.R.S. 20-217(A).
- D) Wrong because private rating opinions are market information, not regulatory permission to transact insurance under A.R.S. 20-217(A).
Memory hook
Out-of-state insurer? Still needs Arizona's certificate of authority.