What is the McCarran – Ferguson Act?

The McCarran Ferguson Act is a law that makes the insurance industry exempt from most federal regulations including some (but not all ) of the antitrust laws. The Act was passed in 1945 after the Supreme Court ruled that the federal government was permitted to regulate insurance companies under the Commerce Clause of the Constitution. This ruling came as a part of the United States vs South-Eastern Underwriters’ Association case.

Senators Pat McCarran and Homer Ferguson sponsored the act, which provides that ‘Acts of Congress’ which are not expressly aimed at the regulation of the insurance industry will not over-rule laws or regulations that are intended to regulate the business of insurance.

The McCarran-Ferguson act still applies today, and it remains an important one. Indeed, one of the recent proposals for healthcare reform made by the Republicans may require the McCarran-Ferguson Act to be modified. In February 2010, the House of Representatives voted in favour of repealing the Act in terms of how it applies to health insurance, but other types of insurance are still covered.

The act protects certain state laws regarding insurance and allows each state to regulate the insurance industry, including establishing their own licensing requirements for insurance. It also exempts insurance companies from federal anti-trust legislation, at least in part, and protects the insurance industry from a federal take-over. It is widely felt that insurance is one of the most regulated industries in the USA, and insurance companies were concerned about the possibility of even more regulation from the federal government, on top of what the individual states were already doing. State insurance regulators were concerned about the outcome of the South Eastern Underwriters’ Association case, and while Attorney General Biddle denied that the government had any intent of increasing regulation, the McCarran-Ferguson Act of 1945 helped to offset those concerns.

The Supreme Court Case: United States vs South Eastern Underwriters Association Explained

The  Supreme Court case United States vs the South-Eastern Underwriters Association is known because the outcome inspired the McCarran-Ferguson Act, which gave Congress the power to help regulate the Insurance industry.

The case took place in 1942. The Attorney General of Missouri requested the case because the insurance regulators in Missouri felt that they were not able to correct abuses that had been taking place since the 1920s. The Department of Justice investigated the case, and a grand jury then indicted the South-Eastern Underwriters Association, as well as many of their officers and member companies. The defendants were charged with two counts of antitrust violations as well as conspiracy to fix premium rates for fire insurance policies, boycotting independent sales agencies that did not comply. They were also charged with monopolizing markets in several states.

The district court dismissed the indictment, noting that the business of insurance is not commerce and that while it might be considered trade that is subject to local laws, the commerce clause is not to be relied upon.

The question that the Court formulated for the case was whether or not the Commerce Clause gave Congress the power to regulate insurance companies (from health insurance, to social security and disability insurance, to homeowners and life insurance) doing trade across state lines. The Supreme Court had, for the last 80 years, held the belief that insurance is not a commerce transaction, and this is what the case tested. The case in the Supreme Court ruled that the Sherman Act was intended to cover monopolization and that the sales of insurance was indeed a form of commerce that Congress could regulate.

In response to this, the McCarran-Ferguson Act was passed in 1945, giving formal protection to states to allow them to regulate their own insurance transactions, and limiting the way that insurance could be regulated on a federal level. The act still stands now, although it could be modified to change how health care insurance is treated.

What Is A Risk Retention Group?

Risk is an important factor to consider for institutions and companies who are investing in future growth. This is where RRGs come into action as a good option. Risk Retention Groups are designed to help keep things in place for businesses who want to maximize their insurance.

Let’s take a look at what a Risk Retention Group is.

What Is It?

The primary focus of Risk Retention Groups is to help prevent liabilities from swallowing up an entire institution. For example, if a problem occurs and a liability presents itself, this group is going to cover for those concerns. The difference between this and regular insurance is knowing everything is unbundled (pick and choose what you need), and it is controlled by various members.

This ensures the protection is kept to the point and doesn’t block what you are doing.

Benefits of A Risk Retention Group

1) Stable

This is a stable option that is going to keep the risk at bay for all members who are a part of the group. This stability keeps everyone comfortable and ensures liabilities don’t sweep everything away in the long-term.

2) Member Control Over Risk

What is the most important thing for people who are venturing down this path? The goal is to maintain risk as that is the only way to feel comfortable. All members can control risk with RRGs on their side.

3) Avoid Multiple State Regulations

The goal is to keep things simple as that’s most important. You can avoid multiple state regulations by making sure the Risk Retention Group keeps things in place. It will have an all-encompassing solution for your needs.

A Risk Retention Group is a good idea for those wanting to regulate what they’re doing and how their liabilities are handled.

Information On Unfair Claims Settlement Act

Imagine running a business and all of a sudden it is flooded.

You will be running around looking to have things repaired, and that’s normal. However, if the loss is too great, you will want to make a claim to your insurance agency based on the plan that was signed in advance.

Now, what if the insurance agency starts using delay tactics by stating they lost their forms or misplaced things? What if you are in need of the funds right away? What will happen then?

Your Albany lawyers should tell you that this is where the Unfair Claims Settlement Act comes into action as a solution.

Let’s take a look at what this act involves.

Purpose of Act

The primary objective of the Act is to protect individuals and businesses from insurance agencies who don’t work in good faith.

If the court deems their behavior abnormal or based around delay tactics, this act is invoked, and an immediate verdict is sent through to speed up the process.

Benefits of Act

1) Speeds Up Process

The purpose of using this act in the court of law is to ensure the process is sped up. There is nothing worse than having a flooded business or a fire go through without having funds to start repair work.

It leads to significant losses that are hard to recover in the short or long-term.

2) Protects Against Shady Insurers

A major benefit is knowing shady insurers will not be able to scheme their way out of making a payment based on the agreement that was signed. This is important for those who are dealing with an accident and need the funds as soon as possible.

The Unfair Claims Settlement Act is one of those policies that are required to ensure things are managed safely for all parties.

Summary Of Paul v. Virginia In 1869

In 1868, the U.S. Supreme Court ruled that states could regulate insurance sales and issuance. The deciding factor, according to the Court was that insurance sales were not interstate commerce. This case was brought by the National Board of Fire Underwriters. The purpose of the case was to challenge the states’ ability to regulate insurance sales.

In the 19th century, life and fire insurance companies began marketing products nationally. In an effort to encourage local enterprise, states began levying license fees and taxes on insurance companies that were not based in the state. This type of legislation was mostly focused on the large insurance companies headquartered in the Northeast United States.

Paul v. Virginia became a landmark case for states’ rights. Paul was an insurance agent for several New York state fire insurance companies. He was selling insurance in Virginia and was convicted for selling insurance without a license under Virginia law.

Paul lived in Virginia and was a resident of the Commonwealth. He was appointed to sell insurance against fire by several New York insurance companies. He applied for a license with the state, but did not deposit bonds with the state treasurer and was refused the license.

The insurance company lawyers argued that their corporations should be considered citizens and be covered under Article IV and the Privileges and Immunities Clause. The ruling by the Supreme Court denied this argument and found that corporations were not citizens as defined by this clause.

In a later 1944 ruling in United States v. Southeastern Underwriters Association, the court found that insurance was interstate commerce, however by this time state regulatory systems were well-defined. Congress strengthened the states’ positions in 1945 when they authorized the McCarran-Ferguson Act and recognized state insurance regulation.

This ruling also held that the federal government could regulate insurance transactions under the Commerce Clause. To date, this ruling has not been reversed.

About The National Association Of Insurance Commissioners

If you are wondering about the National Association Of Insurance Commissioners (NAIC), you should know that it is an organization composed of the 50 different insurance commissioners in the United States.

Insurance as we know it is a regulated industry, what most people do not know is that each state has an insurance commissioner that oversees the conduct of insurance companies in each state. The NAIC provides support for the state insurance commissioners.

The NAIC itself provides guidelines on the best practices in the industry as well as regulations. Each state, however, is free to modify the implementation of the regulations and guidelines. For the most part, though, the laws governing the industry are pretty standard no matter what the state, although it’s fair to assume there might be differences in the regulations with regard to different insurance products. The main idea behind the NAIC, though, is to provide uniformity in all 50 states so it would be easy for the different insurance companies including family insurance to comply with the law.

What this means is that if you are someone who is looking for an insurance product, any type of insurance product, it is important to take note of the different insurance regulations that are in effect in your state. You might just find that there are slight nuances between the regulations in your state and the rest of the country.

The NAIC is an old organization that was formed in 1871. It was first called the National Convention of Insurance Commissioners, after which it was known as the NAIC. The organization has continued to provide support for the national insurance industry.

If you want to know more about what the national gathering of insurance commissioners do, you can find more information on its official website, or watch the video below:

Just What Is Financial Solvency?

If you ever study or deal with matters of a monetary or financial nature, then you hear certain terms. Sometimes, you might come across particular phrases or terms and not understand what they mean. If that’s the case, it’s understandable if you find yourself wondering just what is financial solvency?

In the realm of finance and business, financial solvency is described or defined as the degree to which a company’s or organization’s current assets exceed the liabilities of that same company or organization. Financial solvency is also alternatively defined or described as the power of a business to responsibly meet its longer-term fixed expenses necessary to engender future growth
and expansion.

A simple example to understand all this can actually be done on an individual basis, as a working adult is basically a business of one. If his or her income, savings, investments, property, and other assets are enough to keep paying monthly bills and reducing the person’s debts over time, then his or her net worth is going up over time. That is considered financial solvency.

On the other hand, if a person is seeing their amount of debt rise over time, even if they’re paying monthly bills and minimum debt payments, then they are financially insolvent on an increasing basis. This is often measured using credit scores.

Judging the financial solvency of a company is something many investors do in determining whether or not to buy their stock. It can also impact stock value.

Lenders often look at the financial solvency of an individual in determining the size and interest rates of loans they offer, much less whether or not to offer one at all. This measurement of the financial health and wellness of any individual, company, or organization should be used to map out a better future.

What Is The Connection Between Life Insurance And Genetics?

Life insurance is a product that you might consider if you have a spouse, children, or those that depend on you. This is especially true if your ability to generate income is something they very much rely on. The right life insurance policy can provide money and financial security for your family in the event of your untimely demise, letting your spouse stay in the same home and possibly providing college educations for children and offspring, or even care for disabled or infirm elders according to your estate plan.

Genetic testing is something that can happen in the medical field. It’s a growing science, but the mapping and decoding of the human genome are starting to let doctors and scientists find genes that give people a predisposition to certain conditions, ailments, illnesses, and even specific diseases. This allows them to customize treatment on an individual basis, allowing for longer lives and better quality of life.

Unfortunately, while these two things are individually beneficial to individuals, together they can actually create a conflict, ranging from a headache to even a serious problem. It’s great if you’re looking to be proactive about possible health risks, and genetic testing can certainly help with that, but you might want to not get that done until after you’ve lined up a life insurance policy that’s active and likely to remain with you for a long time.

After many years of advocacy, the Genetic Information Nondiscrimination Act was passed in 2008. It’s supposed to prevent employers and health insurance companies from doing anything discriminatory just based on any information a genetic screening might uncover. Unfortunately, GINA, as the bill is called, only protects against discrimination in the areas of employment and health insurance. It doesn’t protect against discrimination in other insurance areas such as long-term care, disability, or life insurance. Even more regrettable is that less than 1 out of 4 consumers knows this, thinking they are protected by law.

Life insurance providers price their policies based on risk calculation. Many already require physicals, and you’ll face higher rates if you’re overweight, smoke, or conduct risky activities, depending on the provider.

Their actuaries are likely to ask about genetic information, if it’s available. Anything done through your doctor or a hospital is likely going to be covered by medical privilege, but the rise of at-home and retail tests is creating databases of information that are not under privilege. As of the time of writing, there is yet to be a case of a DNA testing company to voluntarily provide such information to life insurance providers, but in an age of declining privacy and mass data, many fear it’s only a matter of time until life insurance companies require genetic testing in order to price policies. A strong fear is that some consumers might be declined policies completely based on something totally out of their control.

Did You Hear About The US And EU Working Together On Insurance Law?

Known as a covered agreement inside the United States, the American government and the European Union have signed a bilateral agreement regarding both prudential insurance and reinsurance measures.

Both parties on opposite sides of the Atlantic consider this agreement to be a sound step moving ahead in cooperation between the United States and the European Union regarding both insurance and reinsurance. A joint statement was released on the matter where officials from both sides claimed that the agreement would benefit insurers, reinsurers, and consumers with protections and regulatory certainty across both economies.

Talks to negotiate the agreement started in 2015 during the Obama Administration, and the final deal was announced in the middle of January 2017, in the waning days of that presidential administration.

The agreement covers a trio of insurance oversight areas. They are namely first reinsurance, secondly group supervision, and thirdly the exchange of any insurance information among involved supervisors. This agreement is in alignment with the terms and conditions laid out by Article 218 of the Treaty on the Functioning of the EU. It also meets the legal definitions of a ‘covered agreement’ as established by the Dodd-Frank Act.

The agreement covers many points, but one of them in regards to reinsurance is the elimination of local presence and collateral requirements for reinsurers operating in the markets across the ocean from one another. Also, in terms of group supervision, insurers operating on the other side of the ocean will be subject to global insurance group oversight involving supervisors from their home jurisdictions. This agreement is also intended to encourage the insurance supervisory authorities of both America and Europe to keep exchanging supervisory information and data regarding both insurers and reinsurers.

A provisional application is a next step for starting to institute the document. The EU must now involve both the European Parliament and the Council in order to conclude this arrangement, per the Treaty on the Functioning of the EU. The U.S. Treasury Department is taking point on the western side of the Atlantic, releasing a fact sheet about the arrangement and providing the full finalized legal text to the legislators and staff of Congress, as dictated by language in the Dodd-Frank Act.

While Brexit seems to be shrinking the size of the EU, and many Western nations show nativist and populist tendencies in recent elections, diplomats and officials of some of the world’s largest economies are working together to keep the global economy functioning smoothly and integrated.

3 Common Tricks Used By Insurance Companies

Insurance companies should operate on incredibly tight margins.  If every client they represented used their insurance policies at the maximum values, the insurance industry would simply collapse.  With that in mind, insurance companies try to save money at every turn, utilizing intense mathematical gymnastics to figure out how they can pay you as little as possible when something happens to you.  While insurance companies will try to scare you into accepting their low-ball offers, you have to stand strong and understand what your true worth is.  At the end of the day, your insurance agent is not your friend.  Do not let them try to play around with you and your family’s livelihood.

Settlement Agreement Deadlines

One tactic many insurance companies employ is trying to force you to sign a settlement agreement while you are still undergoing medical treatment.  While it might sound like a good idea to get some money right away, you have to remember that insurance companies have years of experience with dealing with clients suffering the same injuries or damages as you.  They know how much money you are going to need.  By setting up an arbitrary deadline, they are trying to make you agree to a settlement that is beneficial to them.

Blaming Injuries On Pre-Existing Conditions

As we have established, the entire goal of insurance companies, like any other company, is to make money.  If you allow insurance companies to access your medical records (do not sign anything that authorizes this unless you are signing up for insurance that requires it), they will use that information against you.  For example, if you were in a car crash that left you with a concussion, the insurance company might use a previous injury or pre-existing condition to get out of paying you what you deserve.  They will say that you were aware of the risk, and they will charge you more in premiums.  Do NOT let them control you like this.

Disputing the Severity of Your Injuries

This is pretty cookie-cutter stuff.  Do give the insurance companies any reason to think you are in better shape than you actually are.  Do not lie about your injuries, but be realistic about them throughout the entire process.  If you tell the truth, and have your doctor to vouch for you, you will be fine.

If you have insurance for injuries and sustain a serious injury, do not let insurance companies bully you.  Understand your worth, and keep records of everything.  There is no reason why you should receive less compensation than you deserve.