A line of authority (LOA) is an insurance company's authorization to sell a particular type of insurance in a given state. Each state has its own rules and regulations governing the sale of insurance, so an insurer must obtain a separate LOA for each state in which it wants to do business.
An LOA is granted by the state's insurance department after the insurer has submitted an application and supporting documentation demonstrating that it meets all the requirements to sell the desired type of insurance in that state. The insurer must also have a physical presence in the state, typically in the form of an office or branch location.
Once an LOA is obtained, the insurer can begin selling policies immediately. There are usually no restrictions on the number of policies that can be sold, nor is there typically a minimum premium requirement. However, some states do require insurers to post a bond before they can begin selling policies. This bond serves as protection for policyholders in case the insurer becomes insolvent and is unable to pay claims.
If an insurer wants to add additional lines of coverage beyond what was originally authorized on its LOA, it must submit another application to the state's insurance department and go through the same approval process again.