Unauthorized insurers are entities that

• A. Are approved by the state department of insurance
• B. Present products as insurance without approval and may face penalties
• C. Operate only in foreign markets
• D. Are always legitimate

Answer: (B)

Unauthorized insurers are those not licensed by the state’s department of insurance to sell insurance or issue policies in that state. They may market and present products as insurance without the required approvals, which is illegal. Regulators can impose penalties such as fines, license suspension or revocation, and even criminal charges. This distinguishes them from authorized insurers, who must be approved to transact business. The other options describe situations that don’t define unauthorized insurers, and they don’t capture the legal risk and lack of authorization that characterize these entities.