Insurance Regulation in the United States: An Overview for Business and Government

Insurance Regulation in the United States: An Overview for Business and Government

Insurance Regulation in the United States: An Overview for Business and Government

Insurance Regulation in the United States: An Overview for Business and Government

Synopsis

A unique, objective description of the insurance regulatory system in the United States.

Excerpt

The insurance business in the United States currently comprises approximately 1,700 life and health insurance companies and 3,300 property-casualty insurance companies. Although many of these companies are commonly owned and managed in "groups," the number of separate insurance underwriting enterprises is still very large in comparison to most other countries. As of 1995, these insurers' combined assets were $2.9 trillion, and their total premiums of $820 billion were the equivalent of almost 11 percent of the gross domestic product of $7.2 trillion. in addition to the insurers themselves, there are a multitude of related businesses and professions, including agency and brokerage operations; actuarial, legal, and accounting functions; and claims adjusting, consulting, administration, and the like. Total employment in the United States insurance industry is estimated at 2.2 million individuals.

In 1995, Japan represented the largest segment, approximately 31 percent, of the world insurance market, measured by premiums. the United States was second with 30 percent, and Germany was third, with 7 percent. in terms of premium as a pecentage of gross domestic product, Japan, South Africa, and South Korea ranked first, second, and third, respectively, in 1995.

Insurance regulation in the United States is extensive and complex, especially because most regulation exists at the individual state level rather than at the federal level. Although there is a substantial amount of standardization, insurers operating in numerous states are still subject to separate and mostly non-uniform requirements pertaining to licensing, investments, rates and forms, taxation, and other matters from one state to another. This non-uniform or "patchwork" regulatory scheme, particularly when viewed from a global perspective, has recently led to proposals for a single federal regulatory system, at least with regard to insurer solvency standards and the handling of insurer insolvencies. Neverthe-

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