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
Means of funding permitted under the employee retirement income security act of 1974 (ERISA). The administrator of a pension plan can comply with required minimum funding standards by ...
Named peril policy is how it’s called in the Real Estate Industry the insurance policies that specify the perils it covers. Under a named peril policy, if anything that isn’t ...
Coverage for two or more persons with the death benefit payable at the death of the last of those insured. Premiums are significantly lower under joint life and survivor insurance than for ...
Insurance that usually follows the format of comprehensive health insurance plans in that there is a coinsurance requirement of usually 75 to 80%, and a limit on benefits for any one person ...
Time frame during which an annuitant makes premium payments to an insurance company. The obligations of the company to the annuitant during this period depend on whether a pure annuity or ...
Expense of soliciting and placing new insurance business on a company's books. It includes agent's commissions, underwriting expenses, medical and credit report fees, and marketing support ...
Property insurance premium rate that is applicable to a single, particular piece of property. ...
Clearinghouse and forum of information concerning the environment used by local governments. Included in the information are topics on drinking water systems, pesticide management, public ...
Type of surety bond that is either a fiduciary or a court bond. Fiduciary Bond guarantees that individuals in a position of trust will safeguard assets belonging to others placed under ...
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