Insurance Regulation

Summary

The state and federal regulatory framework governing insurance companies, agents, and consumer protections.

Overview

Insurance regulation in the United States is primarily conducted at the state level under the McCarran-Ferguson Act (1945). Each state has an insurance department headed by an insurance commissioner. The National Association of Insurance Commissioners (NAIC) develops model laws and standards to promote uniformity. Federal regulation affects insurance through ERISA (employee benefits), HIPAA (health privacy), and the Affordable Care Act (health insurance markets).

Solvency Regulation

Insurance companies must maintain minimum capital and surplus requirements to ensure they can meet their obligations. Regulators conduct financial examinations and monitor risk-based capital ratios. Companies in hazardous financial condition may be placed into rehabilitation or liquidation. Guaranty associations provide a safety net for policyholders when insurers become insolvent, with coverage limits varying by state.