Alien Insurer

What is 'Alien Insurer'

An alien insurer is an insurance company offering insurance in a country other than the country in which it was established.

BREAKING DOWN 'Alien Insurer'

An alien insurer is defined by the relationship between the country where it is incorporated and the location in which it sells a given policy. As long as a policy gets sold in a country other than the country in which the insurer is domiciled, the insurer would be considered alien insurer. A company based in Switzerland would be considered a domestic insurer of a policy purchased in Zurich. If a person in New York purchased a policy from the same company, however, the insurance company would be considered an alien insurer.

Regardless of where the insurer is located, it must follow the rules and regulations governing insurance practices in each locale where policies are offered and sold. These regulations may exist at multiple levels of government. For example, in the United States, different states have their own specific requirements for alien insurers operating under their jurisdiction. Chief insurance regulators from each state and territory in the United States collectively govern the National Association of Insurance Commissioners, or NAIC, which meets three times a year and establishes regulatory standards at the national level. The group also publishes a quarterly listing of alien insurers who have provided the NAIC with information indicating they have fulfilled a set of standard criteria for operation in foreign countries.

Example of an alien insurer

Lloyd’s of London underwrites a large number of policies in the United States, where its syndicated underwriters would be considered alien insurers. Because Lloyd’s operates under a different structure than most commercial insurers, it can often offer surplus lines insurance that may be difficult or impossible to cover under a regular domestic insurer. For example, prominent American singers such as Bruce Springsteen, Bob Dylan and Mariah Carey have held insurance through Lloyd’s for their voices, covering potential lost work in the event of damage to their vocal cords.

Alien insurer Compared to foreign insurer

In the United States, an insurance company represented by an agent in a state other than the one in which it is incorporated is considered a foreign insurer. This terminology distinguishes companies based in the United States but selling policies across state lines from alien insurers, which are based in another country. As with alien insurers, foreign insurers must comply with laws governing the jurisdiction in which they issue policies. For example, Mutual of Omaha is a Nebraska-based insurance company that sells insurance throughout much of the United States. Agents selling the company’s policies in the state of Washington would be considered representatives of a foreign insurer and would need to abide by the regulations established in Washington, rather than those established in Nebraska.