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
Same as term: generally accepted accounting principles (GAAP): ...
Form of cash refund annuity used by contributory pension or employee benefit plans. When employee participants die before receiving all of their contributions in the form of retirement ...
Coverage for defense costs incurred in defending a company from an unfriendly takeover attempt. Hostile takeovers have been one of the hottest business topics in recent years. Vulnerable ...
Use of a home, and the land and buildings surrounding that home, free from the claim of creditors. This right gives rise to an insurable interest. ...
Type of logic that makes the assumption that what has happened in the past will happen in the future, given the same conditions surrounding the two occurrences. In other words, "History ...
In some life insurance policies, provision that permits the beneficiary, upon the death of the insured, to receive not only the death benefit payable under the policy but also all premiums ...
Inland marine policy that protects an insured against loss for property that is shipped. One policy may be written for a single shipment, as for a family moving household goods, or it may ...
System in which shareholders are not issued physical stock certificates; instead, they are sent a statement that shows the number of shares registered in the shareholder's name on the ...
Program instituted by the Small Business Administration (SBA) that guarantees a construction contract bond in the event the issuing surety company suffers a loss. This is an effort by the ...
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