Principles of Risk Management and Insurance, 13th Edition

What Areas are Regulated?

Insurers are subject to numerous laws and regulations. The principal areas regulated include the following:

• Formation and licensing of insurers

• Solvency regulation

• Rate regulation

• Policy forms

• Sales practices and consumer protection

• Taxation of insurers

Formation and Licensing of Insurers

All states have requirements for the formation and licensing of insurers. A new insurer is typically formed by incorporation. The insurer receives a charter or certificate of incorporation from the state, which authorizes its formation and legal existence.

After being formed, insurers must be licensed to do business. The licensing requirements for insurers are more stringent than those imposed on other new firms. If the insurer is a ...