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
Premium paid at the time a policy goes into effect. With some policies, such as group health insurance, premiums are subject to adjustment at the end of the policy period to reflect loss ...
Provision in health insurance under which an insured disabled person is required to undertake (and is reimbursed for) expenses associated with vocational rehabilitation for retraining to ...
Contribution whose purpose is to increase funding of underfunded pension plans. It is part of the calculation that is made to arrive at the plan's minimum funding requirement. Usually a ...
disposition of a claim or policy benefit. Policies may specify time limits for payment of claims or benefits and designate various methods of settlement at the option of the insurer or the ...
in life insurance, receipt by a company of an insurance application accompanied by the first premium. in property and casualty insurance, a company's receipt of an application. ...
Deliberate act or omission. These torts include trespass an individual enters property owned or in the possession of another without permission; conversion an individual exerts control and ...
Arrangement between the seller and the buyer in which the buyer has the right to buy (call option) or sell (put option) a security at some time in the future at a price stipulated at ...
Additional coverage available on most property insurance policies through the extended coverage endorsement. Windstorms, including hurricanes, cyclones, and high winds, are not among the ...
Sum it takes to replace an insured's damaged or destroyed property with one of like kind and quality, equivalent to the actual cash value, minus physical depreciation (fair wear and tear) ...
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