Summary Of Insurance Regulation

The following is a quick summary of the regulation of insurance, brought to you by 4HealthInsurance.com.

1. Insurance is a comprehensively regulated business because of the following

(a) insurance contracts are complex and technical;
(b) insurance represents future promises of payment.
(c) the consequences of insurer failure are serious and
(d) insurers hold money in a fiduciary capacity.

2. The basic purpose of insurance regulation is to preserve and extend the benefits of insurance.

3. The South-Eastern Underwriters Association case established the right of the federal government to control insurance.

4. The insurance commissioner or board is the primary regulator of insurance. Some of his more important functions include the licensing of insurance agents and companies, approval of policy forms, examination of insurers, rate making, and investigation of consumer complaints.

5. While life and health insurance contracts are not standardized, there are provisions which, by law, must be incorporated into all contracts. Some of the more important provisions include grace periods, incontestability, misstatement of age, loan values, nonforfeiture values, reinstatement, and settlement options.

6. The powers of an insurance agent are governed by the general law of agency, the agency agreement, and the insurance contract.

7. An insurance agent is a person who is authorized by an insurer to solicit, negotiate, or procure life, health, accident, and annuity coverages and/or to collect premiums.

8. An insurance agent for a legal reserve life insurance company must pass certain examinations before he can be licensed to sell life or health insurance.

9. There are certain activities in which insurance agents are prohibited from engaging. The more important of these include rebating, twisting, and the misrepresentation of policy provisions.