Georgia Property & Casualty Practice Exam

Which statement best describes an authorized insurer?

1. An insurer with a certificate of authority to transact insurance in Georgia

2. A domestic insurer authorized to transact insurance in all 50 states

3. An insurer with at least 25 appointed agents in Georgia

4. An insurer authorized to transact insurance for other insurers in Georgia

The correct answer is: An insurer with a certificate of authority to transact insurance in Georgia

An authorized insurer is defined as an insurance company that has received a certificate of authority from the state's insurance department, allowing it to conduct insurance business within that state, in this case, Georgia. This status is important because it ensures that the insurer complies with state regulations and has met the necessary financial and operational standards set forth by the authorities. The requirement for a certificate of authority is crucial for consumer protection as it ensures that the company is legitimate and able to pay claims. Insurers that are not authorized may still exist but cannot legally sell insurance products in Georgia, which could leave policyholders without protection. The other choices illustrate different scenarios but do not accurately capture the essence of what constitutes an authorized insurer. For instance, while a domestic insurer may operate in multiple states, it is the certificate of authority specific to Georgia that determines whether it is authorized there. Furthermore, the number of agents or the ability to transact for other insurers does not inherently affect the status of being an authorized insurer in the state. The focus remains on the necessary certification to ensure lawful operations within Georgia.