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
(stop loss) amount over which a health insurance plan pays 100% of the costs in a percentage participation plan. Here, an insured shares costs with the insurer according to some ...
Coverage in which an insurer is not bound to cede and a reinsurer is not bound to accept a risk. A separate reinsurance contract covers each cession. The contract is automatically renewed ...
Agent who is licensed and who markets and services insurance policies in a state in which he or she is not domiciled. ...
Measure of policyholder interest in a variable annuity policy prior to the annuity date. This measure is similar to a unit in a mutual fund. ...
State operated insurance company used in workers compensation insurance in some states where the risks are so great that the commercial insurance companies cannot operate at affordable ...
Modification of the major medical insurance policy that provides coverage for the terminating employee who otherwise would not be covered by a health insurance policy. Usually, this ...
In life and health insurance, person whose physical condition is less than standard or who has a hazardous occupation or hobby. For example, an applicant with a history of strokes is ...
Provision in an insurance policy that indicates what is denied coverage. For example, common exclusions are: hazards deemed so catastrophic in nature that they are uninsurable, such as war; ...
Organization of trial attorneys who specialize in the representation of defendants who become subject to tort actions. Generally, these tort actions involve bodily injury or personal injury ...
Have a question or comment?
We're here to help.