Key Takeaways
- The Insurance Commissioner (or Superintendent) is the chief regulator—APPOINTED by the governor in most states (37), ELECTED in 11 states
- Rate regulation systems: PRIOR APPROVAL (must approve before use), FILE AND USE (file then use immediately), USE AND FILE (use then file), OPEN COMPETITION (no filing required)
- The Commissioner has authority to grant/revoke licenses, approve rates and forms, conduct market conduct and financial examinations, and handle consumer complaints
- MARKET CONDUCT exams review business practices (sales, underwriting, claims); FINANCIAL exams verify solvency and reserves
- The insurance department protects consumers through complaint handling, and patterns of complaints can trigger market conduct examinations
Last updated: December 2025
State Insurance Department
Commissioner/Superintendent Role
The Insurance Commissioner (or Superintendent) is the chief regulator of insurance in each state.
Selection Method
| Method | States |
|---|---|
| Appointed by Governor | 37 states (most common) |
| Elected by Voters | 11 states |
| Appointed by Commission | 2 states (NM, VA) |
Powers and Duties
| Category | Specific Powers |
|---|---|
| Licensing | Grant, deny, suspend, revoke producer and insurer licenses |
| Rate Regulation | Approve or disapprove rates based on state system |
| Form Approval | Review and approve policy forms and endorsements |
| Financial Oversight | Monitor insurer solvency, reserves, and financial condition |
| Market Conduct | Examine business practices and sales activities |
| Consumer Protection | Investigate complaints, protect policyholders |
| Enforcement | Issue cease and desist orders, impose fines |
| Receivership | Take control of insolvent insurers |
Rate Regulation Systems
Prior Approval
| Feature | Details |
|---|---|
| Timing | File rates, receive approval, THEN use |
| Review | Commissioner reviews before use |
| Standard | Adequate, not excessive, not unfairly discriminatory |
| Flexibility | Most restrictive system |
File and Use
| Feature | Details |
|---|---|
| Timing | File rates, use IMMEDIATELY |
| Review | Commissioner reviews after implementation |
| Disapproval | Can disapprove if inappropriate |
| Flexibility | More flexible than prior approval |
Use and File
| Feature | Details |
|---|---|
| Timing | Use rates FIRST, then file |
| Review | Commissioner reviews after implementation |
| Disapproval | Can order changes if inappropriate |
| Flexibility | Even more flexible |
Open Competition (No File)
| Feature | Details |
|---|---|
| Timing | No rate filing required |
| Review | Market competition determines rates |
| Oversight | Commissioner monitors for unfair practices |
| Flexibility | Most flexible system |
Exam Key: Prior Approval = File → Approval → Use. Open Competition = Use (no filing).
Examinations
Market Conduct Examinations
Purpose: Review insurer's business practices.
Frequency: Every 3-5 years (or as needed).
Scope:
- Sales practices
- Underwriting decisions
- Claims handling
- Producer licensing compliance
- Advertising and marketing
Findings: Can result in corrective action, fines, consent orders.
Financial Examinations
Purpose: Verify financial condition and solvency.
Frequency: Every 3-5 years minimum.
Scope:
- Assets and liabilities
- Loss reserves
- Investments
- Reinsurance arrangements
Standards: Based on NAIC Financial Examination Handbook.
Cost: Paid by insurer being examined.
Consumer Protection
Complaint Handling Process
- Receive complaint from consumer
- Investigate allegations
- Mediate between parties
- Resolve or refer for further action
Tracking and Publication
- Maintain database of complaints by company
- Publish complaint ratios
- Patterns of complaints can trigger market conduct exams
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Test Your Knowledge
In a "Prior Approval" rate regulation system, when can an insurer use new rates?
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Test Your Knowledge
In most states, how is the Insurance Commissioner selected?
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