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Unformatted text preview: UNIVERSITY OF TECHNOLOGY, JAMAICA FACULTY OF BUSINESS AND MANAGEMENT SCHOOL OF BUSINESS ADMINISTRATION INSURANCE UNIT 3-GOVERNMENT SUPERVISION Agenda Reasons for Insurance Regulation Methods for Regulating Insurers What Areas are Regulated? Current Problems and Issues in Insurance Regulation OBJECTIVES Explain the major reasons why insurers are regulated. Identify the major areas that are regulated Explain the objectives of rate regulation and the different types of rating laws. Reasons for Insurance Regulation Maintain insurer solvency Compensate for inadequate consumer knowledge Ensure reasonable rates Make insurance available Methods of Regulating Insurers The three principal methods of regulating insurers are: Legislation, through both state and federal laws Court decisions, e.g., interpreting policy provisions State insurance departments What Areas Are Regulated? All states have requirements for the formation and licensing of insurers o Licensing includes minimum capital and surplus requirements o A domestic insurer is domiciled in the state o A foreign insurer is an out-of-state insurer that is chartered by another state, but licensed to operate in the state o An alien insurer is an insurer that is chartered by a foreign country, but is licensed Insurers are subject to financial regulations designed to maintain solvency Assets must be sufficient to offset liabilities Admitted assets are assets that an insurer can show on its statutory balance sheet in determining its financial condition...
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