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
Amount in a cash value life insurance policy that a policy owner will receive upon surrender of the policy, minus any outstanding loan and accrued interest. A table in the policy shows the ...
Curve that results when yields on short-term treasury issues exceed those on long-term government debt. A widely accepted theory holds that when short-term and intermediate term issues are ...
Circumstance in which no agent is servicing a debit. ...
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 relationship:Amount of ...
Damage or destruction of property and/or property that is illegally transferred as the result of misconduct of individuals. The risk is insurable. ...
Probable number of times that a specified event is likely to occur. For example, if E is the event, then the odds for E occurring are X to Y according to the following relationship: P (E) ...
Insurance established under the federal Railroad Retirement Act for railroad employees, covering death, retirement, disability, and unemployment. Benefits are adjusted for cost of living ...
Coverage on an all risks basis for glass breakage, subject to exclusions of war and fire. Thus, if a vandal throws a brick through a window of an insured's establishment, the coverage would ...
In a commercial general liability (comprehensive general liability) policy, exclusion of coverage for sold premises. The objective of this exclusion is to eliminate coverage for property ...
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