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
Information needed for underwriting a life insurance policy, such as an applicant's age, weight, height, and build; personal and family health record; occupation; and personal habits. These ...
Endorsement to an automobile policy that pays specified amount for towing and related labor costs. ...
process of discovering sources of loss concerning the liability risk faced by individuals and business firms. The first step in risk management is to identify the causes of a loss by ...
Association whose membership is composed of surety bonding companies. The association's primary purpose is to act as a rating bureau for member companies by collecting statistics and ...
Same as term Direct Response Marketing: method of selling insurance directly to insureds through a companies own employees, through the mail, or at airport booths. The company uses this ...
Insurance company that specializes in underwriting casualty insurance. ...
Statement made by agent or broker in written form attesting to the insured that the insurance policy is in effect. This statement is prepared by the agent or broker, unlike the binder, ...
Funds receivable or payable that have not been paid in a timely manner, commercial credit insurance protects an insured against declines in the value of receivables due to insolvency of a ...
Conducting of maritime suits involving ocean marine insurance policy claims before an admiralty court. ...
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