Insurance Broker Certification Practice Exam

What is an alien insurer defined as?

1. An insurer licensed in the U.S.

2. An insurer incorporated outside the United States

3. An insurer that does business only within its own state

4. An insurer that operates as a subsidiary

The correct answer is: An insurer incorporated outside the United States

An alien insurer is defined as an insurer that is incorporated outside the United States. This classification is significant in the insurance industry as it differentiates insurers based on their location of incorporation. Alien insurers are subject to the regulations and laws of the country in which they were established, while they must also comply with certain regulatory requirements of the states in which they operate in the U.S. This dual regulatory framework is important for maintaining the integrity and financial solvency of the insurance market within the country. In contrast, an insurer licensed in the U.S. would be considered a domestic insurer if it is incorporated within the country. An insurer that does business only within its own state is typically known as a domestic insurer, and one that operates as a subsidiary is often classified based on its relationship with a parent company. The term "alien" specifically highlights the international aspect of the insurer's origin, underscoring its foreign incorporation.