Washington Life Producer Practice Exam

What must a domestic insurance company in Washington be formed under?

1. Federal law

2. The laws of Washington

3. International regulations

4. Common law

The correct answer is: The laws of Washington

A domestic insurance company in Washington must be formed under the laws of Washington. This is because domestic insurance companies are defined as those that are incorporated under the state laws of the state in which they operate. In this case, it means that the company is chartered and regulated by the state of Washington. This requirement ensures that the company adheres to state-specific regulations, which include licensing, solvency standards, and consumer protection laws crafted to meet the needs and safeguards relevant to policyholders within that state. Being formed under state laws allows a domestic insurance company to operate within Washington and provide services to its residents, while simultaneously being subject to the state's regulatory oversight. Federal law, international regulations, and common law do not govern the formation of a domestic insurance company within the state; rather, they pertain to broader regulatory frameworks that may interact with state laws but do not substitute them for the specific requirements of forming and operating an insurance enterprise at the state level.