while. Figure 2.1 illustrates the evolution of insurance regulation.
|
Paul v. 1869 |
VA Sherman Act 1890 I I I- __________ |
U.S. v. SEUA I |
O’ Mahoney 1958 I_________________________________________ |
I_______________________________________________ |
Anti-trust 1988 I____________________________________________________I | |
|
----------------1-------------------------------------1----------------------- 1877 Local 8ι |
----------------------1----------------------------------------------- 1910 Merritt |
-------Fl--------- t 1945 Ferguson Act |
------------------1----------------------------------------- |
--------------------1----------------------------------------------- 1970’s End of bureau |
-------------------1----------------------------------------------------------------------1 1997 New ISO | |
Figure 2.1: The Evolution of Insurance Regulation
Nowadays, the insurance industry is generally under state regulation with a few
exceptions, although the supporters of federal insurance regulation have been continu-
ing pushing for a change. Furthermore, competition starts playing a bigger role in the
insurance regulation than it used to, although some states still have very restrictive
insurance regulation.
Over time, the highly regulated environment became one of the main character-
istics of the insurance industry. The function of the insurance regulation is two-fold.
The government needs to ensure that insurers maintain a high level of solvency to
meet the obligations of paying claims; and meanwhile stringently supervise the insur-
ance sales, marketing, and policy terms to make sure that the consumers are treated
fairly when they purchase insurance products and file claims.
Because of such strict regulatory environment of the insurance industry, govern-
ment decisions can still cast a huge impact on insurance companies’ practices in the
twenty first century. For example, in 2006, in order to avoid consumer discrimina-