Final answer:
Insurance companies' premium rates are regulated at the state level, where state regulators aim to keep prices low and ensure access to insurance. The NAIC helps coordinate these efforts, but regulations cannot force companies to sustain losses for pricing below fair levels.
Step-by-step explanation:
The premium rates set by insurance companies are regulated at the state level. In the United States, each state has its own set of regulators who oversee the insurance industry.
The National Association of Insurance Commissioners (NAIC) plays a key role by bringing state regulators together to share information and develop consistent regulatory strategies.
Insurance regulators aim to keep the price of insurance low and ensure widespread access to insurance, even though these objectives can sometimes conflict.
Nevertheless, government regulation is limited in that regulators cannot require companies to consistently operate at a loss by charging prices below an actuarially fair level, otherwise others, such as other insurance customers or taxpayers, would have to offset the difference.