The regulatory web. (Regulation: The Big Picture).Regulation of insurance has evolved over decades, divided among the states, an array of federal agencies and a handful of quasi-governmental bodies. Here's how the moving parts fit together. Federal Congress creates laws and funding to implement policy through these agencies: U.S. Department of the Treasury (www.ustreas.gov) * Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. (www.occ.treas.gov) Regulates banks' insurance powers. * Internal Revenue Service (www.irs.gov) Enforcement authority includes treatment of life and savings products; taxation of mutual vs. stock companies; captive insurers; taxation of brokers' income earned overseas; and offshore insurers. * Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. (www.ustreas.gov) Regulates thrifts established by insurers. * Office of Financial Institutions (www.ustreas.gov/offices/domesticfinance/flnancial-institullon/index. html) Oversees the federal terrorism insurance backstop just established by the government. Also reviews OCC and OTS regulations for consistency with White House policy. U.S. Department of Health and Human Services Noun 1. Department of Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Health and Human Services, HHS (www.hhs.gov) * Centers for Medicare & Medicaid Services (cms.hhs.gov) Oversees Medicare+Choice, the managed-care Medicare program. U.S. Department of Labor (www.dol.gov) * Enforces the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. of 1974, which governs many employee-benefit plans-as well as the Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when , which changed continuation coverage rules under COBRA. Also regulates privacy protection of personal health information. * Occupational Safety and Health Administration Occupational Safety and Health Administration (OSHA), U.S. agency established (1970) in the Dept. of Labor (see Labor, United States Department of) to develop and enforce regulations for the safety and health of workers in businesses that are engaged in interstate (www.osha.gov) Responsible for ergonomics standards, which insurers watch carefully for encroachment on workers' compensation laws. U.S. Department of Defense (www.dod.gov) * Runs Tricare health-benefits plan for members of uniformed services, administered regionally by health insurers. U.S. Securities and Exchange Commission (www.sec.gov) * Enforces financial reporting under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting developed by the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). . Also helps regulate sales of variable life and annuity products. U.S. Environmental Protection Agency Environmental Protection Agency (EPA), independent agency of the U.S. government, with headquarters in Washington, D.C. It was established in 1970 to reduce and control air and water pollution, noise pollution, and radiation and to ensure the safe handling and (www.epa.gov) * Oversees Superfund Program. Federal Emergency Management Agency The Federal Emergency Management Agency (FEMA) is the federal agency responsible for coordinating emergency planning, preparedness, risk reduction, response, and recovery. The agency works closely with state and local governments by funding emergency programs and providing technical (www.fema.gov) * Oversees National Flood Insurance Program The National Flood Insurance Program (NFIP) was created by the Congress of the United States in 1968 through the National Flood Insurance Act of 1968 (P.L. 90-448). . Non-Government Organizations Various organizations wield de facto authority, often channeled through government agencies. Major players include: National Association of Securities Dealers National Association of Securities Dealers (NASD) Nonprofit organization formed under the joint sponsorship of the investment bankers' conference and the SEC to comply with the Maloney Act, which provides for the regulation of the OTC market. (www.nasd.com) Self-regulatory body of securities industry; some authority over sellers of variable life and annuity products. Insurance Services Office inc. (www.iso.com) Develops standard forms for many property/casualty lines, files them with state regulators for insurers to use in lieu of developing their own policy forms. Financial Accounting Standards Board (www.fasb.org) Maintains generally accepted accounting principles used by publicly traded companies. Generally, filings with the SEC conform to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . State Legislatures create laws and funding to implement policy, largely through insurance departments: * Solvency--Enforcement of minimum capital standards; power to seize, rehabilitate or liquidate failing companies. Insurance Commissioners * Licensing--Power to grant, deny or revoke authority for companies, agents and brokers to do business in a state. * Rate Making--Varying by state; power to set, review, approve or reject proposed rates filed by companies or rating organizations. * Forms--Varying by state; power to review, approve or reject forms filed by companies or industry organizations such as ISO (see below). * Market Conduct--Sales, servicing and claims practices of companies and agents. Market-conduct exams often done jointly with other states. * Residual Markets--Varies by state; power to establish, operate or regulate entities that cover otherwise uninsurable risks. * Privacy--Enforcement of regulations to protect privacy of personally identifiable financial information. National Association of Insurance Commissioners The National Association of Insurance Commissioners (NAIC) is an Internal Revenue Code Section 501(c)(3) non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. (www.naic.org) Maintains statutory accounting standards and forms on which insurers file quarterly and annual statements with state regulators. Promulgates model laws and regulations for voluntary use by states; offers one-stop, multistate filing for licenses, rates and forms; developing interstate compacts to pool regulatory resources. National Conference of Insurance Legislators (www.ncoil.org) Drafts model laws and resolutions for voluntary adoption by states; has developed interstate compact for insurance receiverships (three member states to date); works to protect state sovereignty over insurance and resist moves toward federal regulation. National Council on Compensation Insurance The National Council on Compensation Insurance (NCCI) is a U.S. insurance rating and data collection bureau specializing in workers' compensation. Operating with a not-for-profit philosophy and owned by its member insurers, NCCI annually collects data covering more than four (www.ncci.com) Files advisory loss costs for workers' compensation in nearly 40 states, using data developed through reporting by members. Insurance Marketplace Standards Association (www.imsaethics.org) Promotes ethical conduct in sales and service by its member companies, which write life and long-term-care insurance and annuities. Rating Agencies Rate the financial strength and commercial debt of insurance companies, thereby influencing their financial management, their cost of capital and their position in the wholesale and retail insurance markets. |
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