{"id":352600,"date":"2017-06-12T14:08:51","date_gmt":"2017-06-12T19:08:51","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/insurance\/insurance-regulation-overview.html"},"modified":"2024-04-12T10:58:57","modified_gmt":"2024-04-12T15:58:57","slug":"insurance-regulation-overview","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/insurance\/insurance-regulation-overview.html","title":{"rendered":"Insurance Regulation Overview"},"content":{"rendered":"\n
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Insurance Regulation Overview<\/h1>\n
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\n By Oni Harton, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Life is full of unexpected events. As insurance consumers, we count on many types of insurance<\/a> to provide us with protection and peace of mind. Knowing that coverage is available when we need it most is helpful.<\/p>\r\n

Whether you’ve contracted a serious illness, experienced damage to your home in a natural disaster, sustained damage in a car accident, or received a life insurance payout from a loved one, you benefit from insurance policies.<\/p>\r\n

The insurance industry affects so many people. It also impacts the financial system as a whole. As such, the insurance sector is regulated on multiple levels. The regulatory framework involves state and federal laws<\/a>. These laws regulate initiatives and the conduct of insurance businesses.<\/p>\r\n

Read on for an overview of insurance regulation. Insurance regulation seeks to protect consumers. It also promotes fairness and the financial health of the insurance industry across jurisdictions.<\/p>\r\n

Who Regulates Insurance Companies?<\/h2>\r\n

In the United States, individual states regulate insurance companies. Each state has its own set of statutes and rules. State regulation originates from the McCarran-Ferguson Act of 1945. The McCarran-Ferguson Act provides that federal law could supersede state insurance regulations. This principle applies unless federal law addresses the business of insurance.<\/p>\r\n

McCarran-Ferguson Act<\/h3>\r\n

The McCarran-Ferguson Act exempts the business of insurance from federal law. This includes federal antitrust laws<\/a> to a limited extent. The Act can exempt the insurance industry from federal antitrust laws. States are exempt from federal antitrust laws as long as the state has an antitrust statute<\/a>.<\/p>\r\n

The McCarran-Ferguson Act provides that supervisory authority for taxation and regulation of the insurance industry is in the public interest. It gives state law preeminence over federal law.<\/p>\r\n

The McCarran-Ferguson Act remains in effect. There have been efforts to repeal or amend it<\/a>. Often these attempts concern the health insurance industry. State insurance departments oversee insurer solvency and market conduct. These departments also rule on requests for rate increases for coverage.<\/p>\r\n

State Insurance Regulation<\/h2>\r\n

In addition to federal insurance regulations, organizations like the National Association of Insurance Commissioners<\/a> (NAIC) encourage state regulatory agencies<\/a> to adopt more uniform rules and regulatory requirements.<\/p>\r\n

Rate Setting<\/h3>\r\n

State insurance departments oversee the regulation of insurance companies and providers. One key area for state insurance regulation pertains to rate-setting. Rate-setting refers to how companies determine the insurance coverage they will provide.<\/p>\r\n

The regulatory system requires rates in insurance contracts to meet the following requirements:<\/p>\r\n