History of Insurance Regulation

During 1752 Benjamin Franklin joined together with the fellow firefighters of Philadelphia to form what is known as The Philadelphia Contributionship for The Insurance of Houses from Loss by Fire, which began the insurance industry’s oldest property insurance company (still in existence today). With the evolution of this entity began the recognition to oversee the insurance policy settlements as well as the creation of those policies. In 1851 New Hampshire began the framework by appointing the first insurance commissioner in 1851.

To help unify and strengthen each state the NAIC was created in 1871 as an ‘advisory body’ in accordance with each state in relation to the other. Although each state has final say, the state commissioner is automatically appointed a position within the NAIC to help strengthen their purpose; “Protect the public interest; Promote competitive markets; Facilitate the fair and equitable treatment of insurance consumers; Promote the reliability, solvency and financial solidity of insurance institutions; and Support and improve state regulation of insurance.” To strengthen each state’s interaction within insurance regulation activities, Congress adopted the McCarran-Ferguson Act in 1945, giving each state the right and responsibility to regulate the business of insurance. This separation allows each state to regulate outside the bounds of Federal jurisdiction unless federal law provides otherwise.

After the 2008 financial collapse transpired people began to realize the fallibility of the economic system and began the process of reforming and regulating the old system. In 2010 the process of state deregulation and Federal regulation of insurance business began with the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically within Subtitle B: State-Based Insurance Reform, wherein it states, “Declares that Congress intends that each state adopt nationwide uniform requirements, forms, and procedures, such as an interstate compact, that provide for the reporting, payment, collection, and allocation of premium taxes for non-admitted insurance consistent with this Act.” Having a newly elected president, Donald Trump, will possibly mean a revision or a complete “dismantling” of “The Dodd-Frank Act”. The new president elect’s goal is to “encourage economic growth and job creation” by dismantling the “ObamaCare” and revising to his liking. Many of his new revisions are in alignment with a recent bill known as the “Choice Act”. The idea is to encourage an active economy to blossom from these dramatic appeals to the former acts of congress.




Major Legislation