Insurers work with both producers and licensed business entities. In order for insurers to transact the business of insurance in a state, the insurer must be properly licensed as a business organization (most are licensed as corporations) and must obtain authority (called a Certificate of Authority) from the commissioner of insurance to conduct the business of insurance in the state. And for individual producers or business entities to represent such properly licensed and authorized insurance companies, the business entities and producers normally need to be either appointed by and/or affiliated with all the insurers that they represent.
Certificates of Authority
Specifically, in order to do business in a state, an insurer must obtain a Certificate of Authority from the insurance commissioner. An insurer with a certificate of authority is known as an “admitted” insurer or an “authorized” insurer. Non-admitted insurers cannot normally do business in a state. (There is a narrow exception to this rule that will be covered later in this chapter.) **
Insurance companies are classified as domestic, foreign or alien depending on their state of organization (where they were incorporated) and their principal place of business, (known as their domicile). Sometimes, an insurance company may be incorporated in a state, such as Delaware, but maintain its domicile or principal place of business elsewhere. If this is the case, it is the domicile or principal place of business that determines the insurer’s status as domestic. ***
A domestic insurer is one that is formed (incorporated or organized) under the laws of the state, and/or is domiciled (has its principa...
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...nce coverage including assessments, membership fees, policy fees, survey fees, inspection fees, service fees or any such similar fees., The consumer protection idea here is for the word “premium” to include all fees and that the premium shall be specified in the policy. The producer receives a commission from the premium and the producer is not allowed to charge any additional fees. The company collects the premium and is not allowed to collect any additional fees. (There is a minor exception to this rule in that if an insured chooses a frequent premium mode, such as monthly, instead of the standard annual premium mode, an insurer is permitted to charge extra for that privilege (known as a service charge). Unlike the premium itself, this service charge does not normally need to be specified in the policy as long as it is in writing and disclosed to the insured.) ***
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