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
Provision of a treaty reinsurance contract stating that if an insurer fails to report a risk that would normally be covered, the re insurer is still liable for the risk. ...
Coverage of an employee group whose members receive a monthly disability income benefit, subject to a maximum amount, if illness or accident prevents a member from performing the normal ...
Critical point in the total amount of claims paid above which the excess insurance policy pays a percentage (generally 80-100%) of the claims for any policy year experience. ...
Coverage for an insured's liability for damage to another's property from leakage or overflow of water. Some liability policies specifically exclude water damage, including that caused by ...
Geographical area in which commerce can be conducted without tariffs being applied. The concept was adopted in insurance through the use of a reinsurance facility for buying and selling of ...
Total limit on the amount of coverage an insurer will underwrite on an individual risk. The amount underwritten includes the amount to be ceded through a reinsurance agreement. ...
Type of insurance providing all risks coverage for personal property of the crew and passengers aboard a ship. Marine cargo insurance does not cover personal property of the crew and ...
Association formed to address the requirements of government risk pools. ...
Includes rate of return, how long the annuity's interest rate is guaranteed, loads (front, middle and back), financial ranking of the insurance company offering the annuity, the monthly ...
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