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
Government agency, under the McCarran-Ferguson act (public law 15), that has no authority over insurance matters to the extent the states regulate insurance to the satisfaction of Congress. ...
Factor applied in retrospective rating in order to increase the basic premium to cover state premium taxes for liability and workers compensation insurance. For example, if a state premium ...
Type of term life insurance policy that has a face amount that increases to a predetermined sum and then decreases to zero at the termination point of the policy, while at the same time ...
Life insurance rate determined by the valuation of company policy reserves. State regulators set strict standards for policy reserves to make certain that life insurers will have enough ...
New pension-accounting rule (Employers Accounting for Post retirement Benefits Other Than Pensions) which mandates that employers that provide post retirement benefits to include life ...
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Market in which buyers dominate trading and force financial asset prices up. ...
Rights of employees who leave an employer with a qualified plan to withdraw their accumulated benefits. With a contributory plan, employees have immediate rights to their own contributions, ...
Single payment or periodic payments that are made to purchase an annuity. ...
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