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
Written evidence given to a policyowner by an insurance company or insurance agency that it has received a premium. ...
Membership organization of insurance companies that write workers compensation insurance. The organization collects statistics on the frequency and severity of job-related injuries to ...
Method of funding a pension plan through: an individual level cost basis, where future benefits for the employee are estimated and contributions are made periodically while the employee is ...
Coverage in the event an employee is kidnapped from an insured business's premises and forced to return to aid a criminal in a theft. ...
Standards set by the various state regulatory authorities that determine how financial statements must be prepared for regulators. The states are responsible for making certain that ...
Quarter credited, for retirement benefits under Social Security, when the worker's earnings exceed a minimum amount in a given quarter. Credited quarters are extremely important for fully ...
Omissions from coverage found in products liability insurance. The policy does not provide coverage if the business manufactures a product that does not meet the level of performance as ...
Requirement of state approval of property insurance rates and policy forms before they can be used. Individual states regulate insurers and approve their rates. There are three methods of ...
Agent who is licensed and who markets and services insurance policies in a state in which he or she is not domiciled. ...
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