Final answer:
The Office of Insurance Regulation reviews insurance business applications to issue a Certificate of Authority, balancing premium affordability with broad access to coverage while assessing financial stability and legal compliance.
Step-by-step explanation:
Once an organization has filed an application to conduct insurance business, the Office of Insurance Regulation will begin its review for issuing a Certificate of Authority. This review process is a critical step in ensuring that the insurance company operates within the regulatory framework established by state insurance regulators. The overarching objective of the government regulation of insurance is to balance the need for affordable insurance premiums with the necessity of ensuring broad access to insurance coverage for consumers.
However, setting too low a premium can lead insurance companies to avoid insuring high-risk individuals or to exit from a state market altogether, as seen in the cases of New Jersey and Florida, where major insurance companies ceased operations in response to aggressive regulatory environments. Therefore, the review process includes rigorous evaluation of the insurer's financial stability, business plans, and compliance with state insurance laws to maintain the delicate equilibrium between premiums and availability—two fundamental pillars of a healthy insurance market.