Principles of Risk Management and Insurance, 13th Edition

Summary

• The insurance industry is regulated for several reasons:

  • – To maintain insurer solvency

  • – To compensate for inadequate consumer knowledge

  • – To ensure reasonable rates

  • – To make insurance available

• The insurance industry is regulated primarily by the states. The McCarran-Ferguson Act states that continued regulation and taxation of the insurance industry by the states are in the public interest.

• Three principal methods are used to regulate the insurance industry:

  • – Legislation

  • – Courts

  • – State insurance departments

• The principal areas that are regulated include the following:

  • – Formation and licensing of insurers

  • – Solvency regulation

  • – Rate regulation

  • – Policy forms

  • – Sales practices and consumer protection

  • – Taxation of insurers

• Property ...