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
Insurance company's net investment income divided by its invested assets. The greater the yield, the better the investments that are being made. ...
In personal injury cases, damages awarded to the plaintiff for the loss of joy of living. For example, if a person's negligent act results in damage to another person's leg, the injured ...
Are you fascinated by the world of real estate transactions but find the complexities of insurance and finance policies a bit daunting? If so, you're in for a treat! Today, we're delving ...
Direct payment to a new custodian for a retirement plan. This payment is not a taxable event since it is not a distribution. The payment must be between like plans; for example, one ...
Binding contract for insurance completed by telegraph. The law has recognized the date an insurance agreement is made as the date that coverage commences, rather than the date stated on the ...
Same as term Chartered Life Underwriter: professional designation conferred by the American College. In addition to professional business experience in insurance planning and related ...
Critical point in the total amount of claims paid above which the excess insurance policy pays a percentage (generally 80-100%) of the claims for any policy year experience. ...
In reinsurance contracts, clause that requires the re-insurer to provide coverage if an underlying carrier is unable to fulfill its obligations under the policy ceded to the re-insurer. ...
In an insurance policy, sentences and paragraphs describing various coverages, exclusions, duties of the insured, locations covered, and conditions that suspend or terminate coverage. ...
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