Unauthorised Insurance: Transacting Insurance Without a Certificate of Authority
Acting as an insurer without a licence is illegal in every US state and a felony in many, with penalties often scaling by premium volume. The statutes target the business of insurance — soliciting, accepting premiums, promising indemnity, holding out to the public. Lawful pooling (municipal pools, captives, self-funded plans, cost-sharing ministries) is common; risk rises with formality, repetition, scale and solicitation.
**Transacting insurance without a certificate of authority** — writing, soliciting, or acting as an insurer without a licence — is illegal in every US state, and in many is a felony. It is the reason informal risk-sharing arrangements can become a separate criminal problem quite apart from whatever they are covering. ## What counts as "the business of insurance" The statutes target acting *as an insurer*: soliciting or accepting premiums, promising indemnity, holding out to the public, and carrying the risk of others. Penalties scale with the amounts involved — Florida, for example, treats unauthorised insurance transactions as a felony with severity tiers keyed to the premium volume collected. The threshold is not a bright line. A one-off informal arrangement among a handful of friends is generally not "the business of insurance", which contemplates a continuing enterprise. Risk rises with each step toward formality: - Written agreements and defined terms - Repetition and continuity across events - Growth in the number of participants or the size of the pot - Solicitation beyond a closed personal circle - Holding funds and administering claims ## Why legitimate self-insurance is different Pooling itself is entirely lawful and common. Municipal risk pools, group captives, employer self-funded health plans, and medical cost-sharing ministries all share risk without being licensed insurers — because they are structured to fit statutory exemptions or because they operate under a specific regulatory framework. The mechanism is not the problem. The problems arise from **what is being covered** and **how much like an insurer you look**. A pool covering lawful risks and structured properly is fine. A pool covering an illegal activity has two independent defects: it is unenforceable as a contract under Ex Turpi Causa: Why Courts Void Insurance for Your Own Wrongdoing, *and* the closer it comes to looking like an insurance operation, the closer it comes to an additional offence. See Insurance Runs on Documentation, Crime Survives on Deniability and Mutual Insurance and the Assessable Mutual.