Insurance Regulation
Who regulates insurance
Insurance in the United States is regulated principally at the state level. In Nebraska, the Nebraska Department of Insurance, headed by a Director of Insurance appointed by the Governor, licenses producers and companies, approves policy forms and rates, conducts financial and market-conduct examinations, and enforces the unfair trade practice statutes. The NAIC drafts model laws and gathers data, but it has no enforcement authority - a favorite exam trap. Federal law matters at the edges (ERISA, HIPAA, ACA, taxation), but "who enforces the insurance code?" is always the state.
Producer licensing and duties
A resident producer must apply, pass the exam, and be licensed before soliciting; insurers then appoint the producer and file the appointment with the Department. Continuing education is commonly 24 hours every two years, including ethics hours. Producers hold premiums in a fiduciary capacity and must remit promptly - commingling is prohibited.
Rate and market standards
Rates must be adequate, not excessive, and not unfairly discriminatory. Classification by risk characteristics is allowed; arbitrary distinctions among similar insureds are not.
Unfair trade practices
Know these by name: misrepresentation, twisting (misleading replacement), rebating (offering part of the commission or anything of value not in the policy), false advertising, defamation, boycott/coercion/intimidation, and failure to maintain records.
Insolvency protection
The Nebraska Life and Health Insurance Guaranty Association pays claims of insolvent member insurers up to statutory limits (typically $300,000 in death benefits and $100,000 in cash surrender value). It may not be used as a selling point.
Rule of thumb: if a question asks who has authority over an insurer or producer, answer "the state insurance department" - not the NAIC, not the federal government.