Types of Insurers - Insurance Companies or Carriers

Insurance Regulation at the State Level

• Regulatory Bodies: The insurance industry is regulated at the state level by the legislative, judicial, and executive branches:

  • Legislative Branch: Writes and passes consumer protection laws.

  • Judicial Branch: Interprets laws and checks their constitutionality.

  • Executive Branch: Enforces laws via the Commissioner, Director, or Superintendent of Insurance, who may create supporting regulations.

Role of the NAIC

• National Association of Insurance Commissioners (NAIC): A support organization of insurance regulators from all states, D.C., and U.S. territories. It promotes uniform state regulations but lacks enforcement power.

Types of Insurance Companies

• Stock Insurance Company:

  • Ownership: Stockholders.

  • Management: Board of Directors elected by stockholders.

  • Profit Distribution: Taxable corporate dividends may be declared but are not guaranteed.

  • Policies Issued: Usually non-participating policies.

• Mutual Insurance Company:

  • Ownership: Policyholders (members).

  • Management: Board elected by members.

  • Profit Distribution: Non-taxable dividends based on surplus funds may be declared but are not guaranteed.

  • Policies Issued: Typically participating policies.

• Fraternal Insurers:

  • Definition: Social organizations providing life insurance, focusing on charitable activities.

  • Structure: Nonprofit.

  • Membership: Specific groups such as religious organizations or lodges.