Background on Regulation of Insurance Companies
Posted on March 30, 2010
Filed Under Uncategorized |
Insurance law refers to law that involves insurance which includes claims and policies. They are usually classified in two categories:
- Regulation of claim handling
- Regulation of the business of insurance.
Generally, insurance companies in the United States are expected to follow similar regulation and law as other business types; whether in land usage, wage and hour, tax and securities regulations. There are additional regulations under the insurance law that insurers are expected to follow.
Regulators in Insurance Companies
In the regulation of the business of insurance under the insurance law, the intention is to assure the insurance companies of solvency. Therefore the regulation governs reserve policies, rates and capitalization among other process in the operations office
In the United States, insurance law is handled by individual states through an administrative agency. The Department of Insurance comprises departments assigned to handle insurance being headed by an Insurance Commissioner. Other states may have different names for the regulators. The agencies or the departments of insurance have the authority to put together systems that involve groups of administrative regulations for the governing of insurance companies within the states. The regulation of insurance under insurance law is exclusive for each state. The departments are also given different names for their agencies and regulators. Insurance regulation has been exempted from federal regulation for majority of cases.
History of Insurance Company Regulation
Different insurance policies can be traced to different times. The health and car insurance schemes are more recently traced to the 20th century while limited policies can be placed at 17th and 18th centuries. The origins generally are different from one country to another, hence different insurance laws. Many countries regulate insurance companies using laws, guidelines and independent commissions as well as regulatory bodies.
Insurance law in different countries protects the policy holder against bad faith claims by the insurer and ensures premiums are not too high or inflexible. These regulators also ensure that the policies and contracts are of the right standard. The issue of fixed price is an issue that can also be handled under insurance law.
This article is not intended as legal advice
Additional Legal Information Source: Bloom Legal, LLC, serving clients in New Orleans, Louisiana.
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