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
Act that mandates that employers who have at least 26 employees must provide a terminating employee and family members, if residents of employee's household, with health insurance coverage ...
Insurance established under the federal Railroad Retirement Act for railroad employees, covering death, retirement, disability, and unemployment. Benefits are adjusted for cost of living ...
Branch office of an insurance company's home office that markets, underwrites, and services the company's lines of business within a specified geographical area. ...
Rules used by state regulators to value securities on the books of insurance companies. Bonds with acceptable credit quality are carried at amortized value, which is the face value plus or ...
Contractual rights to a stipulated percentage of the increase in the value of an insurance agency over a given future period of time. They are used to convey a percentage of the increase in ...
Coverage on an all risks basis, subject to listed exclusions, for personal property of the insured dealer that is used in normal business activities. Goods that have been sold on an ...
Clause listed after the general provisions of the insurance policy that requires the officers of the insurance company to sign their names in order for the contract to be completed. Most ...
In property insurance, when the insurance policy contains this clause, coinsurance defines the amount of each loss that the company pays according to the following relationship:Amount of ...
Measurement of income received by households from employment, self-employment, or investment and transfer payments, as provided monthly by the United States Department of Commerce. ...
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