Definition - What does Unauthorized Insurer mean?
An unauthorized insurer is a party who claims to be a legitimate insurance provider, but is actually not legally permitted to provide insurance. The reason why the party is not permitted to provide insurance could be because the party is actually a fraud, and is not in fact an insurance provider, or because the particular insurer is not allowed to do business in the region of interest
Insuranceopedia explains Unauthorized Insurer
Unauthorized insurers can wreak havoc in the insurance world. This is because they can do things like trick insurance agents into selling policies for them, thus causing a lot of customers to lose substantial amounts of money.
For example, suppose that an insurance company that is only authorized to sell policies in Alaska tricks an insurance agent into selling its policies to people in Oregon. Anyone who buys these policies would be out the money they paid for the premiums, plus whatever damages they accrued during the time during which they were not actually covered.