What is the consequence for an insurer who transacts business without a certificate of authority?

Transacting business without a certificate of authority can lead to serious consequences for an insurer. The appropriate outcome is that the insurer faces fines and penalties imposed by the state for conducting business without proper authorization. States typically require insurance companies to obtain a certificate of authority to ensure that they meet certain regulatory standards designed to protect consumers and maintain the integrity of the insurance market.

Additionally, insurers could also face restrictions on their ability to operate, including potential loss of privileges to conduct business in that particular state. Operating without a certificate implies that the insurer is not compliant with the legal framework established to oversee the insurance industry, which can lead to significant repercussions.

Thus, it's critical for insurers to obtain a certificate of authority before engaging in any business activities to avoid these legal sanctions and ensure the viability of their operations.