Porter Ch. 3: Federal Role in Insurance Regulation Flashcards
Robertson v. California
1946 - licensing of insurance companies and agents part of business of insurance
FTC v. National Casualty Co.
1958 - selling and advertising of insurance polices part of business of insurance
SEC v. Variable Annuity
1959 - risk UW distinctive feature within business of insurance; variable annuities not part of this
SEC v. National Securities
1969 - company-stockholder relations not part of business of insurance
NOT business of insurance
If an activity affects the insurer as it would any other business
Group Life v. Royal Drug
1979 - Blue Shield fixing prices, not business of insurance
Characteristics of business of insurance
Spreading and UW of risk
Direct connection between insurer and insured
Unique to insurers
Only need one to be exempt from McCarran
Product Liability Risk Retention Act of 1981
Addressed price and availability crisis; enabled manufacturers, wholesalers, etc to form own RRG to spread exposures; 1986 allowed for other CI exposures
Causes of Product Liability insurance price and availability crisis
Questionable reserving / ratemaking
Unsafe products
Uncertainties in tort / legislation system
Securities Exchange Act of 1934: Obligations
Annual reports to shareholders
5 years financial data
Liquidity / capital plans
Industry segment information for three years
Employee Retirement Income Security Act of 1974
Designed to ensure plan participants become more informed about benefits; insurers became subject to responsibilities of compliance
OSHA
Requires both employers and employees to comply with safety / health standards
“Other” Federal Regulation affecting insurance industry
OSHA
FBI
EPA
Interstate Commerce Commission
Interstate Commerce Commission
Dictates acceptable minimum policy limits / conditions; forms must be approved; insurer must give ICC 30 days’ written notice before cancellation
Contract of adhesion
Drawn up by insurer; ambiguous language favors insured
Doctrine of reasonable expectations
Insured’s reasonable expectation of coverage is honored
Insurance Industry Trade Association
Exerts influence on NAIC, state/federal legislators and regulators, becomes source of information
Insurance Advisory Organizations
Primarily deal with filing rates or prospective loss costs; provides forum for discussion, researches topics, education
Consumer groups
Voice of the customer; alert regulators to industry problems
Priority for insurance regulators, by line
Private auto
Homeowners
Commercial Auto
CMP
Priority for insurance regulators, by topic
Price Market Availablilty Solvency Licensing Corporate Org
Federal intervention in “business of insurance”
NFIP
TIRA
Risk Retention Acts
Federal intervention in activities that are not “business of insurance”
ERISA
Federal Taxation
SEC requirements
