INSURANCEREGULATION

Main Reasons for Insurance Regulation

There are two main reasons for the regulation of the industry.

We serve the public welfare to protect the public and its assets. Insurance is vital to the American economy. To avoid competition such as price-fixing or rate inadequacy that would be damaging to our industry, and ultimately to the public, which insurers serve.

Coverages evolve as society and consumer needs change. Premiums must be reasonable given predicted losses. Necessary coverages must be readily available. As society changes, insurance coverages emerge, such as coverage for social media liability and active assailant events.

As you continue in your career, you'll experience what we call “hard" insurance markets and “soft" insurance markets, which change coverage availability and pricing. For more on industry

Continued from page 22 cycles, read the linked article. At this time, we're in a hard market, and for many newer producers, this will be a new challenge.

Who Regulates the Insurance Industry?

Since the founding of America's first insurance company in 1736, states regulated the insurance industry. After the Civil War, a case arose in 1869, Paul v Virginia An insurance agent violated Virginia law by selling insurance without a Virginia producer's license. After Paul was arrested, he sued the state, claiming insurance was interstate commerce, and lost. The U.S. Supreme Court ruled that insurance was not interstate commerce and that state regulation applied. That decision stood for the next 75 years.

In 1944, in United States v. South-Eastern Underwriters Association (SEUA), the U.S. Attorney General sued the SEUA, alleging it colluded to set property insurance rates.