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
Entitlement of a pension plan participant (employee) to receive full benefits at normal retirement age, or a reduced benefit upon early retirement, whether or not the participant still ...
Endorsement to a business property floater policy that covers neon signs for all perils, both while they are being moved and once they are in place. Signs that are attached to a building ...
Coverage for a lender who has accepted property on the floor of a merchant as security for a loan. If the merchandise is damaged or destroyed, the lender is indemnified. The policy is on an ...
Loss that is not a direct result of a peril. For example, damage to property of a business firm would be a direct loss, but the loss of business earnings because of a fire on its premises ...
Policyholder's equity share of the life insurance company's assets. The share is based on the policyholder's contribution to assets (the company's gross premiums minus cost of insurance, ...
Highly visible form of marketing communication with the public with these objectives: (1) encourage agents and brokers to sell insurance company products, (2) predispose customers to be ...
Trade association located in New York City, consisting of approximately 200 captive insurance companies. The objective of the association is to further the common interests of its members. ...
Coverage in event of damage or destruction of animals that are being shipped. ...
Reduction in automobile insurance rate for a student with a good academic record. Some statistical studies suggest that good students have fewer automobile accidents. ...
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