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
Device that allows plan participants in employee stock ownership plan (ESOP) trust to reinvest the dividends into their section 401 (k) plan. Under the switchback approach, plan ...
Academic publication of the American risk and insurance association in which articles deal with aspects of risk, insurance, and allied fields of study. ...
Negligent acts and/or omissions by the individual (s) and the organization (s) resulting in damage to the environment. For example, pollution of the environment suits against manufacturers ...
Dwelling insurance is how it’s called the most obvious coverage type under the homeowner’s insurance umbrella. It deals with the damages done to the physical structure of the ...
Mathematical determination based on the expectation of loss and the benefits to be paid in such an eventuality. The premium charged will vary directly with the probability of loss. ...
INSURANCE tax that exhibits direct impact on the book income preference. Beginning with the year 1990, the book income preference became equal to 75% of the excess of current adjusted ...
Value or cost of the actual net protection, in life insurance, in any year (face amount less reserve) according to the yearly renewal term rate used by an insurance company. ...
Act in which volunteers of nonprofit organizations and government entities do not incur liability if they are acting within the scope of their volunteer activities, their actions do not ...
In property insurance policies, provision that states that the insured will receive indemnity for expenses incurred as a result of acts by the fire department taken to save or reduce damage ...
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