1. Licensing and Regulatory Filings
In order to operate legally, insurance companies must file for a license with the appropriate state regulator. This includes providing information on the company's officers, directors, and shareholders. Additionally, regulatory filings may require submission of financial statements, product information, and more.
2. Financial Statement Filings
Financial statements provide a snapshot of a company's financial health and are an important tool for regulators in assessing risk. Insurance companies are required to file financial statements with state regulators on a regular basis.
3. Product Filing
Insurance products must be registered with state regulators before they can be sold to consumers. This includes providing detailed information on the product, such as its features and risks.
4. Company Organization Filings
Companies must file documents with state regulators to indicate their organizational structure and management team. This includes filings such as articles of incorporation and bylaws.
5. Agent and Broker Licensing
In order to sell insurance products, agents and brokers must be licensed by the state in which they operate. This generally requires passing an exam and meeting other requirements regarding education and experience.
6. Consumer Complaint Database
The NAIC maintains a database of consumer complaints against insurance companies. This helps regulators assess how well companies are serving their customers and identifies potential areas of concern.
7. Market Conduct Examination
Regulators routinely conduct market conduct examinations to assess insurers' marketing practices, sales techniques, and customer service interactions. This helps ensure that companies are behaving lawfully and treating consumers fairly.
8. Enforcement Actions
If an insurance company violates state law, the regulator may take enforcement action such as issuing a cease-and-desist order or fining the company. These actions help ensure that companies comply with regulations and protect consumers' interests.
9. Receivership and Insolvency Proceedings
If an insurance company becomes insolvent or is placed in receivership, the regulator will take steps to protect consumers and ensure orderly winding down of the company's operations. This may include liquidating assets or transferring policies to another carrier.
10. Surplus Lines Filings
Surplus line filings are made when an insurance company wants to sell products that are not available through regular channels (i.e., through licensed agents). This usually occurs when the company does not meet the eligibility requirements for selling in a particular state or when there is not enough capacity in the regular market to meet demand.