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
Provision in an insurance policy that permits an insured to cancel the policy and recoup the excess of the paid premiums above the customary short rate for the expired time. The clause also ...
Coverage against flooding for personal and business property under the National Flood Act of 1968, which encourages participation by private insurers in the program through an industry ...
Amount of the loss absorbed by an insurance company after deducting any reinsurance applicable to the loss, as well as subrogation and ABANDONMENT AND SALVAGE rights. ...
Property and casualty coverage that indemnifies automobile dealers if a dissatisfied customer demands a refund within the period of time allowed under the Uniform Commercial Code. This ...
Cost of doing business, not including pure expectation of loss. ...
independent advisor to insurance companies, corporations, federal, state, and local governments, and labor unions on actuarial matters. These include evaluation of the liabilities of ...
Same as term Assignment Clause: feature in a life insurance policy allowing a policyowner to freely assign (give, sell) a policy to another or institution. For example, in order to secure a ...
Act that prohibits insurance companies, group health plans, and health maintenance organizations from establishing lifetime limits or annual limits on mental health coverage that are lower ...
One of four SEC divisions that administers the procedure through which public companies must disclose all relevant material in order that a potential investor might make an informed ...
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