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
Federal statute that permits the self-employed a 100% tax deduction for the family health care expenses to include health insurance premiums, disability INCOME insurance premiums, and ...
One that combines the two forms of ownership, stock and mutual. A stock insurance company is owned by stockholders, whereas a mutual insurance company is owned by its policyholders. A mixed ...
Method for triennial examination of insurance companies as established by the national association of insurance commissioners (NAIC). Teams are composed of representatives from several ...
In some states, principle of tort law providing that in the event of an accident each party's negligence is based on that party's contribution to the accident. For example, if in an auto ...
Addition to the pure cost of insurance that reflects agent commissions, premium taxes, administrative costs associated with putting business on an insurance company's books, and ...
1% of the loan amount paid to the lender for making a loan. ...
Assumption of total disability when an insured loses sight, hearing, speech, or a limb. When such a loss occurs to an insured with disability income insurance, the insurer often assumes ...
Single limit insurance program remaining in force for several years as compared with traditional insurance programs where there is a series of annual limits. The LUMP insurance program is ...
Removal of money from an individual life insurance policy or an employee benefit plan. A cash withdrawal from a life insurance policy reduces the death benefit by the amount of the ...
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