Issues and Needed Improvements in State Regulation of the Insurance Business (Executive Summary)

States have the primary responsibility for regulating the business of insurance. Critics charge the national insurance industry is not effectively regulated at the State level, and that the State insurance departments do not adequately protect consumers. State regulators, on the other hand, maintain that they do serve the public. GAO examined the resources and activities of the State insurance departments through a questionnaire to all States and fieldwork in a sample of 17 States. Each State has an insurance regulatory agency whose reponsibilities include licensing companies and insurance agents, maintaining a system of financial and trade practice regulation, and ensuring that rates are not excessive, inadequate, or unfairly discriminatory. They are also responsible for monitoring the compliance of insurance companies with legal requirements and for receiving and responding to consumer complaints. GAO reviewed numerous market conduct examination reports and found deficiencies in all of them. In general, the number of people with professional training on the staffs was small, little was spent to upgrade the staffs, and salary levels were comparatively low. The primary focus of the study was on automobile insurance, particularly price regulation, risk classification, and insurance availability.