DUTIES OF INSURANCE COMMISSIONER

Insurance Guaranty Association

-Most states have an Insurance Guaranty Association in place to protect insured and claimants against losses when an insurance company becomes insolvent. -All property and casualty insurance companies operating in the state are required to be members of the association and commit to share in the losses resulting from a company becoming insolvent.

The state department of insurance is responsible for:

1. Insurance Companies 2. Insurance Agents 3. Ratification - Approval of policy forms, endorsements, rates, filings, and rights. 4. Enforcement - Actions taken when companies and agents do not follow the law. The commissioner has the authority to take action to enforce the law (suspend, revoke, remove license of agent or a company's authority).

Transacting insurance and company approval

1. The Department of Insurance issues the insurance company a/an 'certificate of Authority' so they can begin doing business in the state. 2. A company who has been granted the above, is considered "admitted" to operate in the state.

Duties of the Commissioner:

1. Transacting insurance and company approval 2. Approve policy forms, rules, and rates 3. License approval 4. Examination of records 5. Investigate unethical conduct 6. Investigation 7. Penalties

Exp of insurance guaranty association

80% of the paid, unearned premium may be reimbursed to the policyholder by the Guaranty Association.

Examination of Records

The Department of Insurance may " " of both companies and agents in the state to ensure they are in compliance with state laws. The DOI has the power to require free access to all books and papers related to the business.

Investigate Unethical Conduct

The Insurance Commissioner does not write insurance laws, but it does enforce them. The Commissioner's office will "- - -" and take the appropriate actions which could include fines, suspensions and revocations.

insurance guaranty association 2

This non-profit association helps pay the claims of insolvent insurers who are residents of the state at the time of the loss or the property is permanently located in the state. Some states have limitations on claims payments related to the total amount of the claim or the time period for filing. Unearned premiums for policies in force may also be considered within the association's guidelines.

approve or ratify policy forms, rules, and rates.

Who is responsible for writing the policy forms, determining rates, and establishing the underwriting rules? It's the Insurance company. The Commissioner and DOI don't make any of these, they just approve them.

Insurance laws

govern how insurance companies and agents operate in each state. While there are some laws unique to individual states, many of the insurance laws are consistent in most states. In this section, we will address those rules and regulations that are similar in most states. Then in the state specific lesson, we will address the unique differences for your state.

non- admitted & unauthorized insurer

is not licensed in the insured's state but may be licensed in the state where the company is based. Surplus Lines insurers are an example of non-admitted insurers. Non-admitted insurer's policies are still valid but are subject to different regulations than admitted carriers. Lloyds of London is an example of a surplus lines insurer. It is foreign licensed but sells policies in the U.S. Non-admitted carriers to not participate in the state's guaranty fund and therefore are not backed by the state. However, they fill an important role in the insurance economy by offering insurance for specialty risks not served by standard insurance carriers.

once and agent is licensed, LM would file their appointment:

means they may represent that insurance company. Agents who work for independent insurance agencies may be appointed to represent multiple companies for a variety of products. An appointed agent is one who has obtained your license and the insurance company has authorized you to represent them in the business of insurance.

The commissioner is the state's Department of Insurance's chief executive and administrative officer. In broad terms, the commissioner and the DOI are tasked with:

• regulating the business of insurance in the state, • ensuring that the laws pertaining to insurance are followed and enforced, • protecting and ensuring that consumers are treated fairly, and • maintaining fair competition in the insurance industry.

License Approval

What do we call an individual who has been approved by the state to conduct insurance business? Individuals who want to conduct insurance business must be licensed by the state's insurance department. Each state sets forth the license types and requirements.

National Association of Insurance Commissioners

As you know, each state has an insurance department headed by a Director/Superintendent/Commissioner of Insurance who is responsible for controlling insurance matters in the state. The commissioners from each state make up the (NAIC) which meets regularly to discuss and coordinate regulations for each state.

Investigation & Penalties

Process for Department of Insurance investigations and penalties: • If the DOI investigates and finds that the insurance code has been violated, they give written notice to the person charged with the violation. • The violator then responds to accept the findings and penalty or to demand a hearing. • The DOI is authorized by state statute to impose administrative penalties on a person or entity licensed in the state. Penalties of thousands of dollars may be levied. • Lists of insurer violations and penalties are sometimes listed on the state's DOI website.