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
Contractor who represents different insurance companies and who searches the market for the best place for a client's business. The independent agent, who owns the records of policies sold, ...
Representative of an insurance company who sells ordinary and industrial life insurance policies. In an effort to move their field forces into the ordinary life business, many industrial ...
Coverage for small groups that cannot meet the underwriting standards of true group insurance. Even though the franchise insurance covers an entire group, individual policies are written on ...
Annual report to policyholders of certain cash value life insurance products and annuities to inform them of the value of the investment portion of their contracts. Buyers of whole life ...
Cost of an annuity. Annuities are often paid for in a lump sum rather than annual or other periodic payments. This sum, which guarantees an income, usually for life, is called the purchase ...
Total of interest, dividends, and other earnings derived from the insurance company's invested assets minus the expenses associated with these investments. Excluded from this income are ...
Yearly renewable term (YRT) life insurance under which an insured can usually re-apply for term insurance every fifth year at a lower premium than the guaranteed renewal rate. If the ...
Fidelity bond under which an insured employer is reimbursed for loss caused by the dishonest act of two or more employees named or listed in a schedule attached to the bond. The specific ...
Coverage for an employer in the event of dishonesty of any employee. ...
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