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
Day-to-day care that a patient (generally older than 65) receives in a nursing facility or in his or her residence following an illness or injury, or in old age, such that the patient can ...
Law under which one state gives favorable tax treatment to an insurance company domiciled in a different state that is admitted to do business, provided the second state does the same for ...
Clause common to life and health insurance policies issued during wartime that exclude benefits for military service-connected perils of death, disability, illness, accident, or sickness. ...
Use of another party's property in exchange for rental payment. ...
In marine insurance, clause giving an insured the right to abandon lost or damaged property and still claim full settlement from an insurer (subject to certain restrictions). Two types of ...
Wrongful conduct causing false arrest, invasion of privacy, libel, slander, defamation of character, and bodily injury. The injury is against the person in contrast to property damage or ...
professional designation earned after the successful completion of three national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as ...
Same as term Unallocated Funding Instrument: pension funding agreement under which funds paid into a retirement plan are not currently allocated to purchase retirement benefits. The funds ...
Type of individual retirement account (IRA) allowed by the employee retirement income security act of 1974 (ERISA), in which contributions are paid into the bank's interest-bearing ...
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