Final answer:
An insurer formed under the laws of another country operating in a different state is known as an Alien insurer. Foreign insurer refers to a company incorporated in one U.S. state but operating in another, whereas a domestic insurer is incorporated and operates within the same state. Thus, the correct option is B.
Step-by-step explanation:
When transacting business in a state where it is not incorporated, an insurer formed under the laws of another country is known as a Alien insurer. A foreign insurer refers to an insurance company that is incorporated in one state of the United States but is doing business in another state. A domestic insurer is an insurance company that is incorporated and doing business in the state it is formed. An interstate insurer is not an official insurance industry term and does not apply to this context.
The terms 'alien,' 'foreign,' and 'domestic' are legal designations that determine the jurisdiction under which a company operates. Alien insurers must comply with the laws and regulations of the jurisdiction in which they operate, much like domestic and foreign insurers. These terms are important in understanding the regulatory landscape of the insurance industry and the differences in operation based on the origin of the insurer.