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
Attachment to a property insurance policy to protect the interest of the mortgagee in the mortgaged property. If the property is damaged or destroyed, the mortgagee is indemnified up to his ...
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 ...
Surrender of rights by an insured against the third party to an insurance company that has paid a claim. ...
Type of policy with premiums that are fully paid up within a stated period. For example, a 20-payment life insurance policy has 20 annual premium payments, with no further premiums to be ...
Classification of occupations according to the degree of risk inherent in that occupation. ...
Insurance coverages for businesses, commercial institutions, and professional organizations, as contrasted with personal insurance. ...
Interruption of insurance provided for in most property insurance policies under circumstances where a substantial increase in hazard has arisen with the knowledge or control of the ...
Historical mortality table that replaced the annuity table, 1949, used for the calculation of annuity rates with more-current mortality experience at that time. This table was subsequently ...
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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