1.9 State Self-Regulation
As you already know, all life insurance companies must be licensed to participate in the sale of insurance products. There are participating and nonparticipating designations, however.
If an insurance company participates in soliciting insurance business, the company must be licensed in that state. Through case and statutory law, states have developed regulation governing the formation and operation of insurance companies. Florida Statute, Title 37, gives Florida's Office of Insurance Regulation sovereign powers that include:
- Issuing rules and regulations to enforce state insurance laws
- Licensing and supervising insurance companies formed within the state
- Licensing and supervising insurance agents and brokers
- Controlling the kinds of insurance contracts and policies sold in the state
- Determining the financial requirements (reserve) an insurer must keep in order to maintain solvency
- Regulating the investment activity of insurers (risk involvement)
- The rate-making process
- Fair claims handling procedures
- Overseeing insurance companies' advertising and marketing practices
- The ways in which consumers may seek compensation for their damages
Before any entity may operate as an insurer in this state, it must obtain a Certificate of Authority from the Office of Insurance Regulation. The Office begins its review of an application for a Certificate of Authority any time after an organization has filed an application.
Each insurance company must file a complete set of annual financial statements with the Office of Insurance Regulation on a standardized form and compiled according to specified procedures. These are reviewed by the office. Also, the insurance company's complete financial and operating situation is subject to examination by representatives of the office at least every three years.
