Porter Ch 4 Flashcards
Law requires commissioner to submit an annual report to legislature which summarizes activities of department and status of insurance industry in state.
State four requirements of this report.
- Statement of income and expenses of the insurance department
- Exhibit summarizing the financial status and business transactions of licensed insurers in state
- Listing of insurers closed for that business year
- Names of insurance companies in receivership or other official financial dificulty with a brief explanation of status
- Recommendations by insurance commissioner about insurance laws and the department’s operations
List 4 sources of State Insurance Law:
- Legislative Branch
- Executive Branch (DOI and Attorney General)
- Judicial Branch (State Court System)
- State Insurance Regulatory Systems
List 4 features of a typical State Insurance Regulatory System:
- Licensing requirements
- Reporting and ling requirements
- Periodic examinations
- Power to impose sanctions
How do State Legislatures influence insurance regulation:
- Often directly control DOI budgets
2. Pass the insurance laws that insurance commissioners must enforce
List some activities of the National Conference of Insurance Legislators (NCOIL):
- Educating legislators on insurance issues
- Helping communications between state legislators on insurance issues
- Improving insurance regulation
- Asserting legislators’ prerogative in making state insurance policy
- Speaking about Congressional initiatives that might affect state insurance regulation
List areas of Legislative Influence Through
Noninsurance Laws:
- Banking
- Contracts
- Premiums (e.g., premium financing)
- Fraud
- Investments
- Lobbying
List the NAIC fundamental insurance regulatory objectives
- Protect the public interest
- Promote competitive markets
- Facilitate the fair and equitable treatment of insurance consumers
- Promote the reliability, solvency, and financial solidity of insurance institutions
- Support and improve state regulation of insurance
List some examples of ways that NAIC staff supports state insurance regulatory ocials
- Supporting NAIC’s committees and task forces
- Maintain databases to help regulators track financial adequacy of insurers
- Scrutinizing alien E&S insurers seeking to do business in U.S.
- Supporting individual state insurance regulators in court cases by issuing “friend of the court” supportive briefs
- Valuing insurers’ securities
3 Advantages of Model Laws, Regulations, and Guidelines:
- Model laws help legislative bodies streamline their legislative development process
- NAIC model laws help guide states in adopting the same or similar insurance laws, regulations, and guidelines
- Insurers can benefit from legal uniformity among the states
3 Reasons some model laws are changed or never adopted by states:
- State may view as inappropriate or unnecessary due to coverage in other state laws
- Legislators might decide to modify a model law to meet their states’ particular needs or better match other laws
- Legislature considers many matters and may see NAIC model law as just another agenda item
What does the NAIC Review of a state seeking accreditation involve:
-Interviewing department personnel
-Reviewing laws and regulations
-Reviewing prior examination reports
Inspecting regulatory files for selected companies
-Reviewing organizational and personnel policies
-Gain understanding of document and communication flows
-Discussing comments and findings from the review
-Conducting closing conference with the state to discuss findings and prepare a report
List the 3 Standards of Financial Regulation that need to be met to be accredited
- Laws and regulations used by the state must meet certain basic standards of NAIC models
- Regulatory methods of the state must be acceptable
- Department practices must be adequate
2 reasons that many states have concerns with NAIC accreditation program:
- May create resentment due to some legislators who may feel accreditation usurps legislative authority
- Additional and revised model law requirements create a continual need for new legislation
