The federal government is extensively involved in insurance company regulation in the following areas great site:
a. SEC regulations apply to some aspects of insurance accounting and also to companies with publicly traded stock.
b. Annuity contracts are regulated underneath the investment Companies Act of 1940.
c. Federal Trade Commission regulates insurance provider mergers, advertising of catalog shopping insurance, etc.
d. HUD, through the Federal Insurance Administrator, regulates the flood, crime, FAIR Plan and riot reinsurance programs.
e. The Interstate Commerce Commission specifies coverages required of interstate carriers.
f. An international agreement negotiated by the federal government establishes civil liability for airline passengers in international travel.
g. The Price-Anderson Act determines limits of liability and establishes absolute liability on operators of nuclear reactors.
h. The Small Business Administration administers the Surety Bond Guarantee Program
State vs. Federal Regulation
The question of if the public interest rates are best served by federal or state regulation is definitely an open- ended question. A partial summary of the advantages and disadvantages pertaining to each level of authority is placed forth below:’4
Arguments for Federal Regulation
Proponents of federal regulation contend that: state regulation is parochial; state regulation does 59
not have uniformity; assuring regulation is costly. Since insurance companies must cope with numerous insurance departments, each having different requirements , costly duplication is inevitable. It’s further contended that states cannot effectively regulate interstate companies and that state insurance commissioners are unqualified here are the findings.
Arguments Against Federal Regulation
Proponents of state regulation contend that state regulation is attentive to local conditions and needs; state regulation is definitely an established and known entity; assuring regulation encourages innovation and experimentation. It is also claimed that decentralization and dispersion of political power is, by itself, an important value in a democratic society.