Most people will have to take out at least one type of insurance in their lives as a means of financial protection. There are lots of different types, from car to home insurance. As straightforward as insurance might seem, it is actually a very complicated subject. Taking out an insurance policy isn’t as easy as you might think. There are lots of different things that you need to think about. It’s always worthwhile doing your research and learning about different laws that are in place to regulate the insurance industry.
In this article, we will explore six different insurance laws that are worth learning about if you’re interested in taking out an insurance policy:
Auto Insurance Coverage Requirements
There isn’t a single law governing auto insurance coverage requirements. Instead, each state decides upon its own. This has led to a lot of confusion and annoyance, especially in states where requirements are more rigid. One law firm, concerned with reforming California insurance requirements, says that it’s time to change the state’s minimum vehicle insurance levels to amounts that reflect today’s costs. This is a sentiment echoed throughout the United States. Before taking out insurance on your vehicle, it’s worth researching your own states’ laws and finding out whether there are any reformation campaigns that you can get behind to save yourself money on your insurance.
Affordable Care Act
The Affordable Care Act [commonly shortened to ACA] was introduced to reform healthcare coverage in the United States. This law prevented insurance companies from stopping people with pre-existing conditions from taking out insurance, eliminated annual and lifetime caps, and expanded Medicaid eligibility. The Affordable Care Act completely changed America’s healthcare system, making the lives of millions of Americans much easier. Now, people in low-income households can get health insurance and prescription drugs cost much less. More Americans now have health insurance than at any other time in America’s history, which makes the Affordable Care Act perhaps the most significant insurance-related law to be introduced in generations.
Data Privacy and Security
Online privacy and security are the world’s biggest concerns, especially since we live in a day and age where everything is more or less done online. The New York Department of Financial Services introduced new cybersecurity laws, protecting the security of the personal information that’s collected by NYDFS insurance industry licensees. This led to a domino effect that resulted in over eight states introducing similar legislation, including the California Computer Privacy Act, which went into effect on January 1st, 2020.
Terrorism Risk Insurance Act
Following the 9/11 attacks, the Terrorism Risk Insurance Act was introduced in order to provide financial support for terrorism insurance. Without the Terrorism Risk Insurance Act, the price of terrorism coverage would become incredibly expensive. Insurance companies could potentially be driven to bankruptcy after a single event. The current Terrorism Risk Insurance Act will be in place until December 31st, 2027. It will then be reviewed and potentially extended, as it has been twice in the past. This law is very important to the insurance industry and gives businesses and individuals the opportunity to take out terror insurance, protecting themselves and the people around them.
Dodd-Frank Act
The Dodd-Frank Act was introduced after the 2007-2008 financial crisis. It affected the insurance industry in many ways, including that the insurance industry is monitored by the FIO, the FIO can make recommendations about insurers that pose a risk to the Financial Stability Oversight Council, and the FIO can determine whether state insurance measures can be preempted by covered agreements. The FIO releases an annual report on the condition of the insurance industry, including market developments, regulatory changes, and emerging issues. There was a degree of apprehension among insurance companies when the FIO was created. Insurance companies were concerned that the FIO would be followed by other oversight committees, governing bodies, and regulations. This has not happened, and insurance companies are mostly happy dealing with the FIO.
Nonadmitted and Reinsurance Reform Act
The Nonadmitted and Reinsurance Reform Act is technically a part of the Dodd-Frank Act. It came into effect in July of 2011. Prior to its creation, each state had the authority to regulate insurance products and had much greater control over the companies operating in it. After its creation, there are national, uniform standards that states and insurance companies must adhere to. The rules insurance companies must follow are the same in every state throughout the United States, which was not the case before.
At least one of these laws will affect you if you are going to take out an insurance policy. It’s always worth reading about them so that you know what they are and where you stand.
