What is a Certificate of Authority (COA) required for?

A Certificate of Authority (COA) is a crucial document that an insurance company must obtain to legally operate within a specific state. This certificate is issued by the state's insurance regulatory authority and signifies that the company has met all the necessary requirements to conduct insurance business, including financial stability, compliance with state laws, and ethical conduct.

The COA ensures that the insurance company is authorized to provide insurance products, issue policies, and collect premiums from consumers. Without this certification, an insurance company cannot legally sell insurance or engage in related activities. This is important for protecting consumers and ensuring that they are dealing with licensed and regulated entities that are held to state standards. Thus, option B is correct because it directly relates to the purpose of a COA in authorizing an insurance company's operations.