Question 52

An insurance company authorized to do business in a state is described as admitted.

An admitted insurance company is one that has received a license from the state regulatory authority to operate within that state. This designation allows the company to offer policies and provide coverage to residents in compliance with state laws.

A) Alien

An alien insurance company is one that is incorporated in a country outside the United States. While it can operate in the U.S. states, it must be authorized as either admitted or nonadmitted to conduct business. Therefore, this option does not specifically describe a company authorized to do business in a state.

B) Foreign

A foreign insurance company is defined as one that is incorporated in a different state than the one in which it is doing business. Although it can operate in various states, it must also be admitted to do so. Thus, this option does not meet the criteria of being authorized in a specific state.

C) Admitted

An admitted insurance company has been granted a license by the state to sell insurance policies within its jurisdiction. This means it complies with state regulations and is authorized to operate, making this the correct choice as it directly addresses the question.

D) Nonadmitted

A nonadmitted insurance company, also known as a surplus lines insurer, is not licensed to operate in a particular state. While it can provide coverage, it does so outside the regulatory framework of the state and therefore does not qualify as authorized to do business within that state.

Conclusion

The concept of an admitted insurance company is foundational to understanding how insurance operates within state laws. It signifies that the company is compliant with local regulations and authorized to conduct business, unlike alien, foreign, or nonadmitted companies, which do not meet this specific criterion. Thus, admitted is the definitive answer to the question posed.