General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which of the following may lawfully act as an insurer transacting business in this state?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
To act as an insurer in a state, an entity must be authorized — that is, it must hold a certificate of authority issued by the Commissioner authorizing it to transact insurance. Insurers are organizations such as stock, mutual, or fraternal companies. An individual person or a licensed agent is not, by itself, an insurer; producing and assuming risk are distinct roles.
Why the other options are wrong
- B) Individuals act as insureds or producers, not as insurers; assuming risk as a business requires entity authorization.
- C) A licensed agent sells coverage for an authorized insurer; the agent is not the insurer.
- D) Unauthorized entities cannot transact insurance in the state; authorization is a legal prerequisite.
Memory hook
Insurer = authorized entity with a certificate of authority. Agents sell for insurers; they are not insurers.