Functionally, this involves: Historically, the insurance industry has been regulated almost exclusively by the individual state governments.
The McCarran-Ferguson Act specifically provides that the regulation of the business of insurance by the state governments is in the public interest.
[12] After the McCarran-Ferguson Act, the business of insurance remained substantially regulated by state statutory and administrative laws through the years.
[13] In 1972, the model law Unfair Claims Settlement Act was written, which has since been adopted by most states with various modifications.
[14] Despite the long history of state-based insurance regulation, federal regulatory influence has been expanding in the past several decades.
With a wave of solvency and capacity issues facing property and casualty insurers, the proposal was to establish an elective federal regulatory scheme that insurers could opt into from the traditional state system, somewhat analogous to the dual-charter regulation of banks.
In response to the disruption, the National Association of Insurance Commissioners (“NAIC”) adopted several model reforms for state insurance regulation, including risk-based capital requirements, financial regulation accreditation standards,[17] guaranty associations and an initiative to codify accounting principles into the modern Statutory Accounting Principles.
[22] In 2018, the majority of states began to require health insurers to submit market conduct data.
[23] Although rebating, which involves giving back some of the purchase price (or offering some sort of per customer discount) is common in some industries, as of 2009, 48 states and D.C. prohibited it in insurance by adopting a law based upon the NAIC Model Unfair Trade Practices.