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
Transportation firm that must carry any customer's goods if the customer is willing to pay. Common carriers include trucking companies, bus lines, and airlines. ...
A newer generation of life insurance policies that are credited with interest currently being earned by insurance companies on these policies. ...
List of the values of specific medical procedures in comparison with other medical procedures. ...
Individual who possesses a unique ability essential to the continued success of a business firm. For example, this individual might have the technical knowledge necessary for research and ...
Premium applied in workers compensation insurance and in life insurance. In the latter, it is the portion of a premium that is loaded to reflect an insured's expectation of loss, ...
Total of the number of accumulation units times the accumulation unit value for a variable annuity. Similar procedure is followed in the calculation of the current market value of a mutual ...
Instrument that uses noncombustible substances such as carbon dioxide to deprive a fire of oxygen, thereby extinguishing it. ...
Coverage under a commercial workers compensation policy for situations in which an employee not covered under workers compensation laws could sue for injuries suffered under common law ...
Legal instrument that authorizes a person to make medical decisions for another person should that person become permanently or temporarily incapable of making those decisions. This power ...
Have a question or comment?
We're here to help.