Insurance is regulated at the state level, meaning each of the 50 states has their own Department of Insurance. There are a few primary duties that each state's Department of Insurance (DOI) has:
- Licensing Insurance Companies and Agents
- Regulating insurance policies and rates
- Reviewing insurance company practices
- Protecting consumers through education and complaint resolution
Licensing Insurance Companies and Agents
A DOI has a primary responsibility to insure that they are keeping track of licensing for each insurance company and agent operating within the state. They take care of new license applications, renewal applications, offers consumer access to check insurance licenses, and handle disciplinary proceeding regarding licenses.
Regulating Insurance Policies, Rates, and Practices
A DOI has the right to dictate how each insurance carrier underwrites their policies in each state. The DOI ensures that the coverage being offered by a particular carrier follows state law and isn't affecting the consumer negatively. They also regulate rates to ensure that the rates among carriers are accurate and that one carrier isn't collecting enough premium to cover consumer losses, or on the flip side that the insurance carrier isn't overcharging for their product. Most consumers don't know that the insurance carriers do have to make their case to the DOI and can't do whatever they like to without having to make a case for their decision.
Protecting Consumers through Education and Complaint Resolution
Your state's Department of Insurance is an excellent resource for gaining more knowledge on insurance and different policy types. They are also an excellent resource for providing consumers with tips on finding the right company, the right insurance, and in many cases most DOI's will provide consumers with information on coverage rates and any pending complaints against a carrier or agency.
One of the most important services that the state DOI provides is complaint resolution, meaning, when a consumer has an issue with their carrier, for example, their carrier won't pay their claim, the consumer can go to the Department of Insurance and file a complaint again the insurance company or insurance agent. Once a consumer has filed a complaint the DOI then goes to the other party and they are required to respond to the DOI with an explanation of what happened. The DOI then begins their own investigation and obtains documents, call logs, emails, etc. to get a full picture of the issue. From there they will determine what the necessary disciplinary action would be, if any. The primary goal of the DOI is to be a fair third party and if an insurance company or agent is negligent or not fulfilling their responsibilities than it's the DOI's responsibility to ensure they do what they are supposed to. Along with finding a remedy to a problem, the DOI can also pass down to the insurance company or agent, license suspensions, fines, etc. for their negligence.
All in all, the point of the Department of Insurance is to provide oversight on those involved in the insurance industry. They are also there to be a resource for consumers and to provide protection to consumers. The Department of Insurance is always accessible to any member of the public and I would recommend that as a consumer you be proactive and visit your state's DOI website to explore what they have to offer.