The role of a state insurance commissioner is to balance the rights of consumers to purchase affordable insurance protection with an insurance company's goal of achieving a profit. This complex balancing act is undertaken in partnership with consumer groups and insurance industry panels, and is implemented using a combination of guidelines, regulations and legislation. The insurance commissioner focuses on a number of specific duties.
Insurance Company Financial Strength
One of the most important roles an insurance commissioner performs is ensuring that each insurance company has the financial strength and liquidity to honor the policies it sells. This oversight is essential, as insurers must keep reserves of cash to respond in the event of a catastrophe. Working with insurers, actuaries and analysts, the commissioner ensures an insurer keeps adequate funds on hand, without limiting the amount of insurance a company can sell.
Certain insurance products are legally required in every state to ensure that every resident is protected in the event of an accident. Part of the insurance commissioner's responsibility is regulating the rates an insurer charges to prevent the industry from taking advantage of the requirement. The commissioner balances an insurance company's right to achieve a profit with the consumer's right to obtain affordable insurance coverage. To that end, the commissioner approves the rates for certain products before they are put into effect.
Insurance commissioners are also responsible for ensuring that insurance products keep up with changing legal, health and economic climates. The commissioner meets with consumer groups, health practitioners and insurers on an ongoing basis to guarantee the state's approved contracts reflect these market realities. It is the role of the commissioner to ensure the products sold in the state provide adequate coverage without placing an undue burden on the insurance provider.
In a perfect world, every insurance transaction and claim would result in a happy consumer. In the real world, this is not the case. The insurance commissioner oversees an investigative department that examines complaints made against insurers. These investigations are undertaken in by independent investigators. The goal is to ensure the state's insurers are operating in accordance with the law and in good faith.