State RegulationsPA specificDifficulty 2/5
An insurer properly chartered and admitted in another state canvasses Pennsylvania residents and sells policies without ever qualifying with the Pennsylvania Insurance Department. How is the insurer properly characterized?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Admission in another state does not carry into Pennsylvania. Under 40 P.S. § 47, 40 P.S. § 47a, and 40 P.S. § 420, an insurer must obtain a certificate of authority from the Pennsylvania Insurance Department before transacting insurance in the commonwealth. An insurer selling without that credential is an unauthorized insurer, and its Pennsylvania transactions expose both the carrier and anyone who aids the sales to regulatory action.
Why the other options are wrong
- A) Admission is state by state; a foreign insurer becomes admitted in Pennsylvania only by qualifying for a certificate of authority.
- B) Issuing policies from the home state does not exempt the insurer from Pennsylvania certification requirements when it transacts business in the commonwealth.
- D) Selling without a certificate of authority does not remove the carrier from regulation; it makes the insurer unauthorized and its conduct unlawful under 40 P.S. § 47.
Memory hook
Admitted there, unauthorized here: no Pennsylvania certificate, no Pennsylvania sales.