South Carolina Life Insurance Practice Exam

What type of insurer is formed under the laws of another country?

1. Domestic Insurer

2. Foreign Insurer

3. Alien Insurer

4. National Insurer

The correct answer is: Alien Insurer

An insurer that is formed under the laws of another country is classified as an alien insurer. This type of insurer is one that operates in the United States but is incorporated outside of its borders. The classification serves to distinguish between domestic insurers, which are formed within the state in which they operate, and foreign insurers, which are incorporated in another state within the U.S. The concept of the alien insurer is important in understanding how insurance markets are regulated and how companies interact across international boundaries. Regulatory authorities require that alien insurers adhere to certain conditions and obligations when they enter the U.S. markets, which can include obtaining licenses and complying with state-specific regulations. This ensures that they operate under a framework that protects policyholders while allowing for international competition in the insurance market.