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Private Insurers
Various types of private insurers can
differentiated in terms of:
The purpose for which they were formed
Their legal form of organization
Their ownership
Their method of operation



Who Provides Insurance and How Is It Regulated?
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Other Private Insurers
Captive Insurance Companies (low insurance
cost, insurance availability, and improved cash
flow)
Reinsurance Companies

Government Insurance Programs
Federal Government Insurance Programs
State Government Insurance Programs



Who Provides Insurance and How Is It Regulated?
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Federal Govt Insurance Programs

The Social Security Program formally known as Old Age Survivors
Disability and Health Insurance Program (OASDHI)

The Social Security Administration, a federal government agency,
operates the program and provides four types of benefits: -
Retirement benefits to the elderly.
Survivor ship benefits for dependents of deceased workers.
Disability payments for disabled workers.
Medical benefits for the elderly.



Who Provides Insurance and How Is It Regulated?
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State Govt Insurance Programs
Workers Compensation insurance funds
Unemployment insurance programs
Automobile insurance plans
FAIR Plans (Property Insurance)

State Workers Compensation Insurance Funds/Plans
Monopolistic Fund
Competitive State Fund
Residual market plan (or shared market plan)
Guaranty Fund



Who Provides Insurance and How Is It Regulated?
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INSURANCE REGULATION

NATIONAL ASSOCIATION OF INSURANCE
COMMISSIONERS (NAIC)

A Model Law is a document drafted by NAIC in a
style similar to the state statute, that reflects NAIC
proposed solutions to the given problem and
provides a common basis to the states for drafting
laws that affect the insurance industry.




Who Provides Insurance and How Is It Regulated?
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INSURANCE REGULATION

The primary objectives of Insurance Regulations are :

Rate Regulation
Solvency Surveillance
Consumer Protection

Rate regulation serves three general objectives: -
To ensure that rates are adequate
To ensure that rates are not excessive
To ensure that rates are not unfairly discriminatory.
Actuarial equity (Insureds with similar charateristics are placed in one class)
Social equity (Age or Gender)
Unfair discrimination (Race, Religion, Ethnic Background)




Who Provides Insurance and How Is It Regulated?
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INSURANCE REGULATION

Insurance Rating Laws
Prior approval law
Flex Rating Law
File and use Law
Use and File Law
Open Competition (No File Law)
State Mandated Rates

Solvency Surveillance
The Insurance Regulatory Information Systems (IRIS) is
designed by NAIC. It is an Early Warning System to monitor overall
financial conditions of an insurance company in an analytical way.



Who Provides Insurance and How Is It Regulated?
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INSURANCE REGULATION

Consumer Protection

The Insurance Regulators undertake the following activities to
protect insurance consumers: -
Licensing Insurers
Licensed Insurer (admitted insurer)
Domestic Insurer
Foreign Insurer
Alien Insurer
Licensing Insurance Company Representatives
Approving Policy Forms
Examining Market Conduct
Sales and Advertising, Underwriting, Rate Making and Claim Handling
Investigating Consumer Complaints




Who Provides Insurance and How Is It Regulated?
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INSURANCE REGULATION

Excess and Surplus Line Insurance (E & S)
This consists of insurance coverages usually unavailable in the
standard market.

Classes of E&S Business
The following of classes of business are often insured in E & S Line
Market: -
Unusual or unique exposures
For example, singer not showing up for a performance, in which
sponsors suffer a financial loss because of his non-performance.

Who Provides Insurance and How Is It Regulated?
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Classes of E&S Business

Non Standard Business
Do not meet underwriting requirement
High Premium
Insured needing high limits
Insured needing usually broad coverage
Exposures that require new forms

Note:- The E & S broker is licensed by the state to transact
insurance business through non-admitted insurers.
Who Provides Insurance and How Is It Regulated?
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Who Provides Insurance and How Is It gulated?


Who Provides Insurance and How Is It Regulated?