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
Pledge by an insured in writing, and a part of the actual contract, that a particular condition exists or does not exist. For example, an insured warrants that a sprinkler system works. In ...
Clause in the insurance policy that stipulates the exact time the policy coverage begins and terminates. ...
Insurance policy designed to provide coverage for the deductible amount and the coinsurance amount required to be paid by the medicare recipient. Some of these policies will also continue ...
Massachusetts commissioner of insurance responsible for the passage of legislation (1861) that guaranteed policy owners of that state equity in the cash value of their life insurance. The ...
Insurance for which (1) an application has been filed but the first premium has not yet been paid or (2) a life insurance policy that has not yet been delivered to an insured. ...
Protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income. Stop loss reinsurance does not cover individual ...
Employee benefit plan that provides such benefits as long-term care insurance, dependent care spending amounts, sabbaticals, and parental leave. ...
Difference between the actual mortality experience and the expected mortality experience. In statistical terms, this is known as the deviation of the actual (X) from the expected (X). The ...
Same as term Annuity: contract sold by insurance companies that pays a monthly (or quarterly, semiannual, or annual) income benefit for the life of a person (the annuitant), for the lives ...
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