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The world is full of a variety of businesses, from small yoga studios and herbal stores to large corporations selling products worldwide. Some industries have standards organizations that oversee the behavior of professionals such as the American Medical Association or American Bar Association. Other industries may be regulated by other organizations, be regulated by states, or may be unregulated. The little herbal shop must obey tax, employment, and safety laws, but likely has no overarching standards organization. The insurance industry is regulated by each state individually. States may have similar laws and requirements, but they are often a little different. Each state has an insurance department that works with legislators to create or modify insurance laws and regulations. These laws deal with everything from what an insurer has to do to be able to write policies in that state to fielding complaints from consumers. The major goals of insurance departments are to ensure fairness in rates and access to coverage, fairness and timeliness in claims handling, solvency of carriers, education of professionals, and to educate consumers.

The insurance department must authorize an insurer before it can issue policies in any given state. In order to receive such authority, the insurance department will review the company’s assets and surplus, debt to equity ratio, financial statements, plans of operation, lines of business the company will write and is writing elsewhere, articles of incorporation and bylaws, an independent CPA audit, biographical information of the officers and directors, and other information. Once the state determines that the insurer meets all the requirements and has sufficient capacity to handle and settle claims, authorization may be given.

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Christine G. Barlow, CPCU

Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.  

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