The federal government is extensively involved in insurance company regulation in the following areas their explanation:
a. SEC regulations affect some aspects of insurance accounting and also to companies with publicly owned stock.
b. Annuity contracts are regulated underneath the investment Companies Act of 1940.
c. Federal Trade Commission regulates insurance provider mergers, advertising of catalog shopping insurance, etc.
d. HUD, through 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 by the authorities 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 issue of whether the public interest is best with federal or state regulation is an open- ended question. A partial review of the pros and cons pertaining to each degree of authority is set forth below:’4
Arguments for Federal Regulation
Advocates of federal regulation contend that: state regulation is parochial; state regulation does 59
not have uniformity; assuring regulation is costly. 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 lowest price.
Arguments Against Federal Regulation
Advocates of state regulation contend that state regulation is attentive to local conditions and needs; state regulation is an established and known entity; and state regulation encourages innovation and experimentation. It is also claimed that decentralization and dispersion of political power is, in itself, an essential value inside a democratic society.