Final answer:
To be licensed by a state, insurance companies must meet two key requirements: financial stability and compliance with regulations.
Step-by-step explanation:
To be licensed by a state, an insurance company must meet two key requirements:
- Financial Stability: Insurance companies must demonstrate that they have sufficient financial resources to fulfill their obligations to policyholders. This includes having a certain amount of capital and assets to cover potential claims.
- Compliance with Regulations: Insurance companies must comply with the regulations set by the state insurance department. These regulations include rules on pricing, policy terms, claims handling, and ethical standards.
Meeting these requirements ensures that insurance companies operate in a financially secure manner and provide fair and reliable services to policyholders.