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
Amount paid to an insurer. Determination of the actual cost (not the price paid) of a life insurance policy has been widely discussed for many years in life insurance and consumer circles. ...
Bodily injury liability and property damage liability expressed as a single sum of coverage. ...
Provision of a property policy that excludes construction that is likely to suffer a loss. For example, the roofing material used may not be able to withstand a wind force of more than 15 ...
Same as term Captive Agent: representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first ...
Latin for "Let the superior reply." That is, an employer is liable for the torts of employees that result from their employment. For example, an insurance company (the master) acts through ...
Classification of ships according to their construction material, age, physical condition, propulsion type, stress tests of structure, and owners. Marine insurance rates for a particular ...
Endorsement to many commercial property insurance policies that covers office equipment. Coverage includes all equipment, whether or not owned by an insured, improvements an insured has ...
Law that provided for federal crime insurance. Because private insurance is not available for business owners and residents of certain high-crime areas, the act provides that the federal ...
Inland marine policy to cover liability for goods that belong to clients while in a mover's possession. ...
Have a question or comment?
We're here to help.