An insurer organized under the laws of Ohio wants to begin soliciting life insurance to Texas consumers. Under TIC 801.051, what must the insurer do before it transacts insurance in Texas?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 801.051, an insurer may not transact the business of insurance in Texas unless it holds a certificate of authority issued by the department covering the lines of business it intends to write, or unless an exemption applies. This requirement applies to the company itself and is independent of any agent's license. Practically, a company that solicits or delivers policies here without the certificate is transacting insurance unlawfully, and it is exposed to a cease and desist order under Chapter 83 and to other sanctions, regardless of how well licensed its agents may be.
Why the other options are wrong
- A) Appointing an agent does not authorize the insurer; the agent's license and the insurer's certificate of authority are two separate requirements and both must be satisfied.
- B) Form approval governs the content of the policy, not whether the company may do business in Texas at all.
- D) Corporate registration with the Secretary of State may be required of a foreign corporation generally, but it confers no authority to transact insurance.
Memory hook
The company needs a certificate and the agent needs a license — one does not cover the other.