What must insurance companies do to conduct business in a state?

Insurance companies are required to obtain a license or certification from the state to legally conduct business within that state. This process ensures that the insurer meets the necessary standards for operation, which typically include financial solvency, adherence to state laws, and compliance with regulatory requirements designed to protect consumers. Licensing serves as a means for state regulators to oversee the insurance industry and help maintain fair practices.

While registering with the federal government might be necessary for compliance with certain federal regulations, it does not grant the right to operate in a state. Similarly, while having a minimum amount of capital may be a requirement for obtaining a license, it is not the sole factor that allows a company to conduct business. Joining an insurance association may provide additional resources and networking opportunities, but it is not a regulatory requirement for operating in a state. Thus, obtaining a license or certification is the primary and necessary step for insurance companies to engage in business legally in any given state.