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
Assistance program for the financially needy. Medicaid, also referred to as Title XIX of the Social Security Act, was enacted in 1965 at the same time as medicare. It is a joint ...
Regulatory: representative of the commissioner of insurance who conducts an audit of the insurance company's records. Life and Health: physician appointed by an insurance company to ...
Call on a prospective insurance buyer without a prior appointment. Many salespeople find this exercise the most threatening in their career development. Some observers attribute the ...
Bona fide organization that purchases insurance on a group basis on behalf of members. However, a group cannot be formed for the purpose of purchasing insurance since adverse selection ...
Same as term Expected Loss: probability of loss upon which a basic premium rate is calculated. ...
Portion of the death benefit in a life insurance policy paid upon the insured being diagnosed as having a terminal illness that will result in death within a year. ...
In insurance, volume of premiums written. Also describes commercial activities with the profit motive as the goal of the organization. Commercial insurance companies are organized with the ...
Insurance company that is organized under the state laws by which the company is licensed and that is called a domestic insurer. Also, this insurance company may be chartered and licensed ...
Same as term Dynamic: changing state of the economy associated with changes in human wants and desires such that losses or gains occur. Dynamic changes are not insurable. ...
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