State Supervision And Regulation
Primary responsibility for overseeing the insurance industry that has rested with individual states since 1945, after Congress passed the MCCARRAN-FERGUSON ACT (PUBLIC LAW 15). In addition to supervision and regulation, states receive taxes and fees paid by the industry that amount to several billion dollars a year. State insurance laws are administered by state insurance departments that are responsible for making certain that (1) rates are adequate, not unfairly discriminatory, and not unreasonably high, and (2) insurance companies in the state are financially sound and able to pay future claims. To this end, states set requirements for company reserves, require annual financial statements, and examine company books. Each state has an insurance commissioner or superintendent who is either elected or appointed by the governor, with responsibility for investigating company practices, approving rates and policy forms, and ordering liquidation of insolvent insurers. The NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) has drafted model legislation and worked for policy uniformity, but regulations vary widely from state to state.
Whether insurers should be regulated by the states or the federal government remains at issue, but so far insurers and the NAIC lobbying have been effective in resisting federal regulation. Nevertheless, the federal government has a profound effect on the insurance industry through its taxes and a variety of regulations.
Popular Insurance Terms
Life insurance company agency that sells ordinary life insurance and industrial life insurance. ...
Technique designed to permit the exchange of a life insurance policy that has an outstanding loan charged against it for another life insurance policy on a tax-free basis. The procedure is ...
Relationship between occupation of an insured and degree of risk in such coverages as life, health, and workers compensation. Some occupations are more risky than others; for example, a ...
Layman description of the key features and benefits of a pension plan that must be filed with the Department of Labor. Periodic updates of this summary must also be provided to the ...
Same as term Accidental Death Clause: in a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. In double ...
Salesperson who markets and services insurance policies in the state in which he or she is domiciled. ...
Employee benefit insurance plan under which an employer pays the entire direct cost of the plan; employees do not share in the cost, except perhaps through comparatively lower wages. ...
Written notice, to be submitted by the claimant, required by the insurance company in the event of an insured peril. This notice is part of the standard property and casualty insurance ...
Professional designation earned after the successful completion of four national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as principles ...
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