Question

Before an insurance company is able to sell insurance, all insurance rates must be approved by whom?

1) The government
2) The insurance company's CEO
3) The insurance company's chief underwriter
4) The State Insurance Commissioner

Answer 1

Insurance rates must be approved by the State Insurance Commissioner, who works within a framework established by the National Association of Insurance Commissioners to keep insurance affordable and widely available.

Step-by-step explanation:

Before an insurance company can sell insurance, all insurance rates must be approved by the State Insurance Commissioner. The insurance industry in the U.S. is regulated primarily at the state level, and the state regulators are tasked with ensuring that prices remain affordable and that insurance is widely available. These regulators are part of the National Association of Insurance Commissioners, which was established in 1871 to facilitate the exchange of information and coordination of strategies among the states. The requirement for insurance companies to seek approval for their rates is one way the government attempts to prevent prices from becoming prohibitively expensive and to avoid the adverse selection problem, thereby maintaining a balanced and inclusive insurance market.