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
Unit of the life office management association (LOMA), which prepares and administers educational materials for the Fellow Life Management Institute (FLMI) Program. Upon successful ...
Type of guaranteed insurance contract in which the term is fixed, the rate is fixed, and the contract owner does not participate in the insurance company's earnings. ...
Inland marine policy that covers truck drivers for loss or damage to merchandise they haul. The Interstate Commerce Commission requires this coverage for trucks engaged in interstate ...
Coverage for exposures that exhibit a possibility of financial loss. ...
In insurance, agreement between an insurer and an insured under which the insurer has a legally enforceable obligation to make all benefit payments for which it has received premiums. ...
Insurance policy sold by nonadmitted insurer. ...
process of discovering sources of loss concerning the liability risk faced by individuals and business firms. The first step in risk management is to identify the causes of a loss by ...
Coverage for motorized vehicles, each of which requires separate policies for property damage and liability exposures. Motorized vehicles are not covered under a homeowners insurance policy ...
Location that is different from an insured's home or place of business. Under the standard homeowners insurance policy, the property of the insured is covered off premises; for example, if ...
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