South Dakota Crop Insurance Practice Exam

Which type of insurer is incorporated in a state different from where it operates?

1. Domestic insurer

2. Captive agent

3. Alien insurer

4. Foreign insurer

The correct answer is: Foreign insurer

The correct answer is based on the definition of an insurer's classification based on its location of incorporation relative to where it conducts business. A foreign insurer refers to an insurance company that is incorporated in one state but operates in another state. This classification is crucial for understanding regulatory frameworks, as each state governs insurance practices through its own set of laws and regulations. Domestic insurers are those incorporated within the same state where they operate, while alien insurers are those that are incorporated in a different country than the one they are operating in. The term "captive agent" does not fit into these classifications as it refers to a type of insurance agent rather than the insurance company itself. Thus, when an insurer is incorporated in a different state from where it conducts its insurance business, it is categorized as a foreign insurer, highlighting the importance of understanding state regulations and compliance for insurers operating across state lines.