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
Section of the Internal Revenue Code that provides for the taking of the proceeds from one life insurance policy or annuity and the reinvesting of these proceeds immediately in another life ...
Property to be insured, or that is insured, which is located within the specific geographical region falling under the auspices of the fire department. ...
Interest rate credited on three-month United States Treasury bills. ...
Common element in property insurance that excludes electrical damage or destruction of an appliance unless the damage is caused by a resultant fire. ...
Life insurance policy option under which the dividends that have accrued may be applied to mature the policy as endowment insurance. ...
Same as term: engineering approach; human approach ...
Variable-rate bonds whose coupon and value increases as interest rates decrease. ...
worth of each accumulation unit at the end of each valuation period for a variable annuity. This value is similar to that of the net asset value for a mutual fund. ...
First historical mortality table used for the calculation of premium rates for group annuities. This table was subsequently replaced by the group annuity table, 1971. ...
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