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
Group coverage for members of a fraternal association, usually on a nonprofit basis. ...
Dollar limitations under the Internal Revenue Service code as follows: The elective annual deferral limit is $10,000. A highly compensated employee's annual compensation limit is $80,000. ...
Coverage available under two forms for actual or attempted robbery of money, securities or other property. Under the First Form the policy covers if the robbery is committed on the premises ...
Charitable planning strategy in which a donor sells an asset to the charity for an amount less than its fair market value. Internal Revenue Service regulations require that the tax basis ...
Specialist whose task is to place insurance with the specialized syndicates that underwrite particular risks at Lloyd's of London. ...
Insurance company that sells property and casualty insurance only to industrial insureds. These companies are separately licensed and separately capitalized to market insurance to cover the ...
Organization based in Washington, D.C., that is composed of risk and insurance managers of various public entities, to include municipalities and school boards. ...
Accidental death benefit option that can be added to a disability income (DI) policy under which a lump sum is payable at the loss of life, dismemberment, or loss of sight. ...
Limited pay whole life policy under which all premium payments have been made. For example, a 20 pay policy is completely paid for after 20 payments; no future premiums have to be made, and ...
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