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
A person who relies on another for economic support. For insurance purposes, the following may be included: the insured's legal spouse; any unmarried children younger than a specified age ...
Independent insurance salesperson who represents particular insurers but may also function as a broker by searching the entire insurance market to place an applicant's coverage to maximize ...
Type of universal variable life insurance policy that provides guideline premiums to be paid usually by the policy owner. Charges on a monthly basis usually include the cost of insurance, ...
Bankruptcy. If an insured business firm becomes bankrupt, the circumstance does not relieve an insurance company of its obligations under an insurance contract. ...
Affiliate of the national association of life underwriters (NALU) that supports legislators in the interest of the insurance agents. One becomes a member of LUPAC through a monetary ...
Coverage for a tenant with a favorable lease (enabling the lessee to rent premises for less than the market value). If the lease is canceled by the lessor because an insured peril (such as ...
Life insurance policy with a death benefit that is paid only when the second of two insureds dies. No benefits are paid as long as both live or if just one lives. ...
Rating method for commercial fire insurance according to a predetermined schedule. Published by A. F. Dean in 1902, this method was the first comprehensive qualitative analysis procedure to ...
Same as term agent of record: individual who has a contractual agreement with a policyowner. The agent of record has a legal right to commissions from the insurance policy. ...
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