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 for extra expenses associated with the reconstruction of a damaged or destroyed building where zoning requirements mandate more costly construction material. This endorsement is ...
Provision that covers a business to be protected under a reinsurance treaty. The class either can appear at the beginning of the agreement or may be included in the retention and limits ...
Layman description of the key features and benefits of a pension plan that must be filed with the Department of Labor. Periodic updates of this summary must also be provided to the ...
Health insurance plan where a group of physicians and dentists provide medical services to a group of individuals for a predetermined fee. It is a basic type of HEALTH MAINTENANCE ...
Automatic reinsurance that requires an insurer to transfer (cede) and the reinsurer to accept the part of every risk that exceeds the insurer's predetermined retention limit. The reinsurer ...
Rules stating that, under the tax EQUITY AND RESPONSIBILITY ACTS OF 1982 AND 1983 (TEFRA), a plan can not discriminate in favor of key employees regarding contributions and benefits if ...
Type of endowment insurance that matures at a stipulated retirement age and whose purpose is to provide retirement income to the insured. ...
Act of stealing. Coverage can be purchased under most property insurance policies such as the homeowners insurance policy. ...
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 ...
Have a question or comment?
We're here to help.