Final answer:
Insurance companies' financial status is regulated by state law, with goals to keep premiums low and ensure widespread coverage, which can lead to market withdrawals by insurers under restrictive regulations.
Step-by-step explanation:
The financial status of insurance companies is primarily regulated by state law. Each state has its own set of regulators and rules, which are coordinated at a national level by the National Association of Insurance Commissioners. This organization brings together state regulators to exchange information and strategies.
The goals of state insurance regulators often include keeping insurance premiums low and ensuring access to insurance for everyone, although these objectives can sometimes conflict.
In certain instances, if state legislatures impose very strict rules on how insurance companies should operate, the companies might choose to withdraw from the market altogether. This was seen when many insurance companies stopped doing business in New Jersey and when State Farm withdrew from the Florida property insurance market.