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
Trade association of insurance companies that writes transportation, aviation, and marine insurance. The association began operation in the 1880s and it suggests standard clauses to be ...
Same as term Coinsurance: in property insurance, when the insurance policy contains this clause, coinsurance defines the amount of each loss that the company pays according to the following ...
Limited special purposes policy that provides liability and physical damage insurance for owners and operators of trucks while engaged in business. This insurance is often purchased by a ...
Unexpected, unforeseen event not under the control of the insured that results in bodily injury. ...
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 ...
Act in which a life insurance company is permitted to transfer the death benefit from the policy to the custodian of a minor beneficiary provided the beneficiary designation has ...
Injury covered under workers compensation insurance. For every part of the body that may be injured, there is a listed financial sum that will be paid. For example, a right severed index ...
Section of some inland marine insurance {transportation insurance) and many other property insurance policies excluding coverage for damage to shipped goods by vermin such as rats. ...
Factors on the application that must be evaluated in order to complete the underwriting process: age; sex; physical condition; personal health history; family health history; financial ...
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