Section G Reg. of Ins.: Porter: Ins. Reg. 3.2 Flashcards
List three circumstances in which state laws and regulations can be void under the US Constitution
- When a state law contradicts a federal law
- When the courts determine that a state law interferes with the purpose or results of a federal law although the state law does not expressly contradict the federal law
- When a state law imposes an improper burden on interstate commerce, even though a federal law does not exist
List the exceptions to the rule that states are given primary regulatory control over the “Business of Insurance” (where the Federal government is involved)
- The Sherman Act prohibits boycott, coercion, and intimidation
- Federal antitrust laws apply to the extent that state laws do not regulate such activities
- Federal laws enacted specifically to regulate the “Business of Insurance” preempt any state laws that apply to the same activities addressed by the federal laws
Briefly describe the definition of the “Business of Insurance”
Any activity that has one or more of the following characteristics:
- Insurer spreads or underwrites the policyholder’s risk
- Insurer and the insured have a direct contractual agreement
- Activity is unique to entities within the insurance industry
List two cases in which the federal government does intervene in the “Business of Insurance”
- Risk Retention Act
- National Flood Insurance Act
House Energy and Commerce Committee identified three principal causes of the Product Liability insurance price and availability crisis of the 1970s.
- Questionable ratemaking and reserving practices of insurers
- Unsafe products
- Uncertainties in the tort and legislation system
Briefly describe a contract of adhesion
Contract drawn up by only one party, the insurer. Ambiguous language will be interpreted in favor of the insured.
Briefly describe the doctrine of reasonable expectations
Insured’s reasonable expectation of coverage will be honored even if that involves reading the policy provisions in ways not intended by the insurer
List cases in which the Federal Government regulates the insurance industry
- Regulation of Securities (issued by insurers)
- Federal Taxation of Insurance Companies
- Employee Retirement Income Security Act of 1974
- OSHA
- Federal regulation concerning discrimination in employment relationships
- Federal agencies affecting the insurance industry because they administer federal laws that apply to insurers
List other parties that have influence on insurance regulation
- Courts
- Insurance industry Trade Associations
- Insurance Advisory Organizations
- Insurance Companies
Briefly describe how the Courts impact insurance regulation
- Policy language
- Policy coverage
- Claims settlement
List some functions of Insurance Industry Trade Associations
- Prompt access to legislative developments
- Can use association personnel as their lobbying forum
- Participate on committees in drafting new legislation or influence changes to pending legislation
- Continually watch for new regulations promulgated by state insurance departments
List some services of “Insurance Advisory Organizations”
- Primarily deal with filing rates or prospective loss costs and forms
- Develop rating systems
- Collect and tabulate statistics
- Research topics important to members and the industry
- Provide a forum for discussion of issues important to members
- Educate members, the industry, insurance regulators and the public about particular issues
- Monitor regulatory issues of concern to members
List some areas of major legislation that have been created due to consumer complaints
- Redlining prohibitions
- Unfair claims practices laws
- Unfair trade practices laws
- Compulsory insurance laws
- High-risk driver pools
- FAIR plans
- Windstorm and other catastrophe pools
- Tort reform
