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The Name Game

WILLIAM D. MEADER

Just about anyone who has owned or operated a small business has purchased an insurance policy. State and local regulations mandate that a business owner obtain an insurance policy to receive a license from the appropriate regulatory agency before doing business. Contractors, cab drivers, commercial truck drivers and others search for low-cost insurance policies that satisfy the regulators' minimum requirements.

The business of insurance is highly regulated to protect the solvency of the insurer, the content of the policy and the handling of claims. In the United States, this regulation falls primarily to the individual states. Each establishes a department of insurance and hires an insurance regulator to license the insurance companies, agents and brokers that market insurance products in their state. The ultimate goal of the regulatory agency is to protect the consumer.

In the United States, an insurer that wants to sell in a specific state obtains a certificate of authority or license from the state agency. This lets the consumer know that the insurer has met the minimum capital and surplus funds to operate and pay claims. This also gives the state insurance department the authority to examine the books and records of the insurer to see that it remains solvent.

If an insurer licensed in another country can meet the regulatory requirements set by ...

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