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📜 '''Authorization''' in the insurance industry refers to the formal permission granted by a [[Definition:State insurance department | state insurance regulator]] allowing an [[Definition:Insurance carrier | insurance company]] to conduct business within that jurisdiction. An insurer that holds this permission is known as an [[Definition:Admitted carrier | admitted]] or authorized carrier, meaning it has met the state's [[Definition:Licensing | licensing]] requirements, [[Definition:Capital and surplus | capital and surplus]] minimums, and ongoing [[Definition:Regulatory compliance | compliance]] obligations. The term also applies more broadly to the delegated authority an insurer grants to intermediaries such as [[Definition:Managing general agent (MGA) | MGAs]] or [[Definition:Coverholder | coverholders]] to bind [[Definition:Coverage | coverage]] on its behalf.

⚙️ Obtaining authorization from a state involves submitting detailed applications that demonstrate the insurer's financial condition, [[Definition:Reinsurance | reinsurance]] arrangements, [[Definition:Business plan | business plan]], and governance structure. Once authorized, the carrier must file [[Definition:Insurance rate | rates]], [[Definition:Policy form | policy forms]], and [[Definition:Annual statement | annual statements]] with the regulator, and its [[Definition:Policyholder | policyholders]] gain access to the state's [[Definition:Guaranty fund | guaranty fund]] in the event of [[Definition:Insolvency | insolvency]]. In the context of [[Definition:Delegated underwriting authority (DUA) | delegated underwriting]], authorization takes the form of a [[Definition:Binding authority agreement | binding authority agreement]] that specifies the classes of business, [[Definition:Policy limit | policy limits]], and geographic territories within which the intermediary may operate.

🔑 Whether it relates to regulatory licensing or delegated authority, the concept of authorization underpins trust throughout the insurance value chain. Regulators rely on the authorization process to keep financially unsound or unqualified entities out of the market, protecting consumers from carriers that cannot pay [[Definition:Claim | claims]]. Carriers, in turn, depend on carefully scoped authorizations to maintain control over their [[Definition:Risk appetite | risk appetite]] when third parties write business on their paper. For [[Definition:Insurance broker | brokers]] advising clients, confirming that a carrier is authorized in the relevant state is a basic but essential step — placing [[Definition:Coverage | coverage]] with an [[Definition:Non-admitted carrier | unauthorized insurer]] outside of [[Definition:Surplus lines | surplus lines]] channels can expose both the broker and the insured to serious legal and financial consequences.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Admitted carrier]]
* [[Definition:Non-admitted carrier]]
* [[Definition:Surplus lines]]
* [[Definition:Delegated underwriting authority (DUA)]]
* [[Definition:Guaranty fund]]
* [[Definition:Binding authority agreement]]
{{Div col end}}

Definition:Authorization - Revision history

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