Which statement is accurate regarding regulation of the insurance industry at the state level?

• A. The insurance industry is regulated at the state level, and both admitted and non-admitted insurers are regulated.
• B. There is no regulation of the insurance industry at the state level.
• C. Regulation is entirely at the federal level.
• D. Regulation applies only to premium rates.

Answer: (A)

In the United States, regulation of the insurance industry is carried out primarily by the states. State insurance departments license insurers, approve policy forms, oversee the filing and approval of rates for admitted carriers, and monitor overall solvency and market conduct to protect policyholders. Both admitted insurers (the standard market) and non-admitted insurers (surplus lines) fall under state regulation. Admitted carriers must meet stringent solvency requirements and obtain approval for forms and rates, while non-admitted carriers operate under surplus lines rules and broker oversight, with state authorities ensuring financial stability and compliance.

This makes the statement that the industry is regulated at the state level and that both admitted and non-admitted insurers are regulated the best choice. It’s not accurate to say there is no state regulation, that regulation is entirely federal, or that regulation only covers premium rates, since state regulation encompasses solvency, licensing, product filing, market conduct, and more.