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
Coverage in which an applicant lot required to take a medical examination, instead answers written questions to ascertain his current physical condition. ...
In life insurance, action by an insurance company canceling premium payments by an insured who has been disabled for at least six months. The policy remains in force and continues to build ...
State plans that provide health insurance coverage for those who are unable to purchase medical insurance. Coverage is provided by a specially formed nonprofit-making pool comprised of all ...
In property and casualty insurance, contract section containing such information as name, description, and location of insured property; name and address of the insured; period a policy is ...
Principle that holds that social insurance programs should be for the benefit of lower socioeconomic segments of society and not for that segment of society that does not require financial ...
Representative of an insurance company in soliciting and servicing policyholders. An agent's knowledge concerning an insurance transaction is said to be the knowledge of the insurance ...
Time limit on the deferred ownership of property such that, 21 years after the property owner dies, the deferred ownership of that property terminates. ...
Maximum sum of money that the insurance company will pay, during the time interval that the product liability insurance coverage is in effect, for all product liability-related claims ...
Procedure in which a home office interviewer (who may or may not have underwriting experience) interviews applicants on the telephone. The questions asked the applicant are automated and ...
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