State Insurance Regulation
A major concern of insurance regulators is that insurers be able to meet their obligations to insureds. A financially weak insurer may not have the resources necessary to meet its obligations.
Therefore, insurance regulators closely monitor the financial condition of insurance companies and take actions necessary to prevent insurer insolvency.
Every state has an insurance department that regulates the insurers doing business in the state. Almost all aspects of the insurance business are regulated to some degree, but most insurance regulation deals with rates, insurer solvency, and consumer protection.
State insurance departments regulate insurance rates to protect consumers from excessive rating and thereby avoid discriminations.
Through solvency surveillance, insurance regulators monitor the financial condition of insurance companies. Such surveillance enables regulators to work with insurers who have financial difficulties to keep the insurers in business and maintain their ability to meet obligations to insureds.
Insurance regulation protects consumers in several ways. Insurance companies must be licensed to write insurance policies in a given state, and licensing requires an insurer to meet tests of financial strength. In addition to licensing insurance companies, states require that certain representatives of insurance companies also be licensed. Such licensing requirements apply to insurance producers as well and may also apply to claim representatives and others.
Most states require that insurance companies file their policy forms with the insurance department so that the department can approve policy language.
States also monitor specific insurance company practices concerning marketing, underwriting and claims. In addition, state insurance departments investigate complaints against insurance companies and their representatives and enforce standards regarding their conduct.
FUNDAMENTALS OF INSURANCE
