PSI Ohio Insurance Practice Exam

What type of insurer has been granted a certificate of authority to conduct business in a particular state?

1. Non-admitted insurer

2. Parametric insurer

3. Admitted insurer

4. Captive insurer

The correct answer is: Admitted insurer

The type of insurer that has been granted a certificate of authority to conduct business in a particular state is known as an admitted insurer. An admitted insurer is one that is licensed and regulated by the state's insurance department, allowing it to operate lawfully within that jurisdiction. This status indicates that the insurer has met specific financial and operational standards established by the state, which provides a level of consumer protection. In contrast, non-admitted insurers do not have the same authorization and may operate without state oversight, typically offering products that are not mandated to adhere to state regulations. Parametric insurers, while an emerging concept in the insurance industry, are not a classification based on regulatory approval but rather refer to insurers that pay out based on predetermined parameters rather than the traditional assessment of loss. Captive insurers are formed to insure the risks of their owners and may or may not be admitted in specific states, depending on their licensing. Therefore, the admitted insurer is the correct designation for a company that has received the necessary certification to conduct insurance business in a state.