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
Law requiring the operator of an automobile to show financial ability to pay for automobile-related losses. In many states evidence usually takes the form of a minimum amount of automobile ...
Medical malpractice that is the legal responsibility of a person or organization not in the medical profession or business. It is usually covered under a professional liability insurance ...
Employee benefit insurance plan whose objective is to provide the retired employee with life insurance. This group life insurance product is composed of two basic parts: annually renewable ...
Professional designation conferred by the American College. In addition to professional business experience in insurance planning and related areas, recipients must pass national ...
Legal entity that provides for ownership of property by one person for the benefit of another. The trustee receives title to the property, but does not have the right to benefit personally ...
Provision established either by state statute or court order that permits the defendant to establish that at the time of the injury incurred by the plaintiff, the defendant provided goods ...
Health insurance coverage only for a specified catastrophic disease such as cancer. It is important to ascertain the waiting period required, maximum benefits and maximum length of time ...
Amendments to the water quality improvement act of 1970 that extends liability of shipowners to any hazardous substances discharged by their ships. The 1970 act made shipowners responsible ...
Account in which the same interest rate is credited on all premiums regardless of the time period and amount contributed. ...
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