Final answer:
Regulation of the insurance industry in the U.S. is mainly a state government responsibility, with state insurance regulators striving to keep insurance affordable and widely available. However, their efforts can lead to challenges such as companies withdrawing from markets where they find regulations too restrictive.
Step-by-step explanation:
The regulation of the insurance industry is primarily the responsibility of state governments in the United States. Each state has its own set of insurance commissioners who are part of the National Association of Insurance Commissioners, an organization that has been in existence since 1871. These state regulators focus on balancing two main goals: making sure that the cost of insurance remains affordable and ensuring that insurance is accessible to all consumers. However, these objectives can sometimes be at odds with one another and are also susceptible to becoming mired in political processes.
State regulators are known to implement regulations to maintain low insurance premiums. Nonetheless, this can prompt insurance companies to limit their services to only low-risk individuals to maintain profitability, as the total payouts cannot exceed collected premiums. If legislative measures to enforce low-priced insurance sales to everyone are too stringent, companies retain the option to cease operations in those states. Such was the case in New Jersey and Florida, where companies like State Farm withdrew from the market due to the regulatory climate.