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
Agreement by the insured that, simply because the insurer investigates and determines a value for the claim, the insurer does not admit liability for the claim. ...
Reserve at the beginning of the policy year that is equal to the terminal reserve for the preceding year plus the net level premium for the current year. ...
Phrase used to describe a method of annuity payout that guarantees a specified number of years, regardless of whether an annuitant remains alive. ...
Plan for excess layer (s) of insurance coverage over the primary coverage, for example, if a corporation buys $8 million as excess above a $2 million self insurance retention level. Excess ...
Coverage during the transfer of securities and monies, precious metals, and other specified types of valuables by armored guard services. Policies are specifically designed to fit an ...
Financial statement, issued by the insurance company on a monthly basis to its agents, showing for each agent his or her commissions earned, premiums written, policy cancellations, and any ...
Homeowners policy to cover the owner of a townhouse. ...
Base upon which a mortality table is built by beginning with a randomly selected group of people who are alive at the earliest age for which statistics are available on the number of people ...
Property coverage on a dealer's interest in equipment while it is being installed. Labor and material are protected against such perils as fire, lightning, and windstorm. For example, if an ...
Have a question or comment?
We're here to help.