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
Assets that are not readily convertible into cash 'without a significant loss of principle, such as an automobile, a house, television set, a radio, etc. ...
Contract combining whole life and decreasing term insurance. A monthly income is paid to a beneficiary if an insured dies during a specific period. At the end of that period, the full face ...
Qualified pension or other employee benefit where responsibility rests with an employer rather than an insurer. A trust fund plan, where assets are deposited with and invested by a trustee, ...
Approach in loss prevention placing emphasis on physical features of the workplace as a potential cause of injuries. For example, if a product is inherently dangerous in design or during ...
act that prohibits employers from requiring employees to retire at age 70. Also, the act prohibits EMPLOYEE BENEFIT PLANS from discriminating against employees in the 40 to 70 age group ...
Same as term Blanket Bond: coverage for an employer in the event of dishonesty of any employee. ...
Arrangement by which an employee can retire and receive full benefits without reduction, or reduced benefits subject to a penalty. These ages can be classified in the following manner: ...
To accept by a reinsurer, part or all of a risk transferred to it by a primary insurer or another reinsurer. ...
Policy that has many similar characteristics to that of the survivor-ship annuity in that the annuitant receives a predetermined monthly income benefit for life upon the death of the ...
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