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
Law, in several states, establishing a fund to guarantee benefits under policies issued by insurance companies that become insolvent. ...
High severity loss that does not lend itself to accurate prediction and thus should be transferred by the individual or business to an insurance company. ...
List and description of valuables, to be utilized in the event an insurance claim must be filed. Included should be: a detailed explanation of possessions that are of special value, such as ...
Cost of the assets listed on the accounting records of the company. These assets include the following: real estate (to include any adjustments for depreciation), transportation equipment ...
Oral or written statement that results in injuring the good name or reputation of another, causing that individual to be held in disrepute. ...
Former method of funding a pension plan. When employees retire, the employer sets aside a lump sum that will pay them lifetime monthly benefits. When determining the amount, these factors ...
Relationship of the frequency of deaths of individual members of a group to the entire group membership over a particular time period. ...
Bona fide organization that purchases insurance on a group basis on behalf of members. However, a group cannot be formed for the purpose of purchasing insurance since adverse selection ...
Holding company formed by at least one stock insurance company. This holding company is owned by its stockholders and is usually listed on the New York Stock Exchange or the NASDAQ. In ...
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