The federal government is extensively involved with insurance company regulation in the following areas his explanation:
a. SEC regulations apply to some facets of insurance accounting and 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 mail order insurance, etc.
d. HUD, with 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 through 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 Sba administers the Surety Bond Guarantee Program
State vs. Federal Regulation
The question of whether the public interest is best with federal or state regulation is an open- ended question. An incomplete summary of the pros and cons regarding each level of authority is set forth below:’4
Arguments for Federal Regulation
Proponents of federal regulation contend that: state regulation is parochial; state regulation does 59
not have access to uniformity; and state regulation is dear. Since insurance providers must deal with numerous insurance departments, each having different requirements , costly duplication is inevitable. It’s further contended that states cannot effectively regulate interstate companies which state insurance commissioners are unqualified more tips here.
Arguments Against Federal Regulation
Advocates of state regulation contend that state regulation is responsive to local conditions and needs; state regulation is an established and known entity; and state regulation encourages innovation and experimentation. It’s also claimed that decentralization and dispersion of political power is, by itself, an important value inside a democratic society.