Insurance regulations

Insurance regulations are legal requirements set by state or federal authorities that control how insurance companies operate in the US. State governments, such as those in California and Texas, primarily enforce insurance laws through agencies like the California Department of Insurance and the Texas Department of Insurance.

The National Association of Insurance Commissioners (NAIC) develops model laws adopted by many states for regulatory consistency. The McCarran-Ferguson Act of 1945 gives states primary authority over insurance regulation, except for cases of federal intervention.

Insurers must maintain solvency standards, such as specific capital reserves–e.g. risk-based capital requirements–to protect policyholders against insolvency. States require insurance companies to file rates and policy forms for approval before selling products like auto or homeowners’ insurance.

Regulatory bodies investigate consumer complaints about practices like claim denials or delays, often imposing penalties on violators–$190 million in fines were assessed nationwide in 2021. Licensing requirements obligate agents, brokers, and adjusters to pass examinations and continue education–New York mandates 15 hours every two years for agents.

Consumer protection regulations ensure clear disclosures on coverages and exclusions; for example, insurers must provide a summary of benefits in health policies under ACA rules. Anti-fraud statutes mandate carriers to report suspicious activities to special investigative units–states like Florida reported over 7,000 insurance fraud referrals in 2022.

Data privacy laws, including the Gramm-Leach-Bliley Act and various state rules like California’s CCPA, regulate how insurers manage customer information. Compliance failures can lead regulators to suspend licenses or order restitution, demonstrated by numerous license revocations published monthly by state departments such as Illinois, as mentioned by Your Insurance Info.