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
Attributes of a particular employee benefit plan. For example, a general characteristic of group life insurance is that the whole group is underwritten, not individual members. ...
Insurance that offers blanket coverage up to a certain dollar amount on all property of the classification covered by the policy. Floater policies, which cover property wherever it happens ...
Same as term Class: group of insureds with the same characteristics, established for rate-making purposes. For example, all wood-frame houses within 200 feet of a fire plug in the same ...
Section of the code that qualifies that the death benefit paid under a life insurance policy is received by the beneficiary income-tax free. These tax consequences apply regardless of the ...
Independent, nonprofit, membership hospital plan. Benefits provided include coverage for hospitalization expenses subject to certain restrictions: for example, semiprivate room only. A ...
Act of starting a fire; arson. Arson is a covered peril under a property insurance contract, provided that the owner of the property is not responsible for the arson. ...
Cost per unit of insurance. ...
Provision in a life insurance policy that if an insured dies within a given period of time, the beneficiary receives the face value of the policy plus its cash value. ...
Type of proportional reinsurance under which the ceding company (primary insurer) cedes a portion of the face amount of the life insurance policy it has underwritten to its reinsurer. The ...
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