Who oversees auto insurance companies?

Every driver needs auto insurance, so it’s no surprise that insurance companies are some of the most profitable and tightly regulated industries in the United States. But who oversees auto insurance companies?

State law regulates auto insurance rates and risk assessment, but the title of who controls insurance companies varies by state.

Many of us depend on auto insurance companies to be there for us during challenging times, such as accidents and breakdowns. This article will tell you everything you need to know about who regulates insurance companies in the United States. 

You can also find reliable auto insurance rates through an online comparison. Enter your ZIP code to use our free auto insurance comparison tool.

Governing Body for Auto Insurance Companies

Who regulates car insurance companies? Some people are surprised to learn that the federal government does not regulate insurance companies. Rather, auto insurance companies in the USA are regulated and governed on a state-by-state basis, mainly because the Constitution makes federal regulation difficult.

If you’re wondering, “Is car insurance regulated?” realize that car insurance organizations and those who regulate the insurance industry and enforce any regulation vary from state to state. In most cases, agency officials — known as the commissioner of insurance — are appointed by the state governor.

Who regulates insurance companies in California? In California, auto insurance is regulated by the Department of Insurance. Travel up the coast and it’s known as the Oregon State Insurance Commissioner. On the opposite coast, the regulator of insurance companies in Maine is called the Bureau of Insurance. 

No matter where you live, every state’s regulatory body for insurance companies ensures insurance companies can offer fair prices and match the coverage needs of the policyholder. Find out how much auto insurance you need.

State insurance regulation officials also oversee licensing. They examine and accept new insurance companies and check the competency of existing ones. These officials also require auto insurance companies to prove that they can pay out large claim amounts as well as offer customers fairly priced comparable options.

State-Regulated Auto Insurance

Are car insurance companies regulated? Yes, and one of the most effective ways state departments ensure insurance companies provide fair coverage is by issuing state licenses. All car insurance companies must obtain licenses from the state Department of Insurance and can’t legally operate without one.

What agency oversees insurance companies? State car insurance regulators examine policies, prices, procedures, and financial solubility. They also review the company’s reputation, dispute records, and issues filed by consumers. If a license is revoked, the insurance company can no longer offer products or services in that state.

Companies must undergo a diligent and highly detailed investigation of their policies, finances, and operations to obtain a license, and regulation does not stop once a license is issued. 

For example, The Florida Office of Insurance Regulation (OIR), who regulates insurance companies in Florida, lists requirements that each provider, agent, and adjuster must meet in order to obtain a license. The Department of Insurance and Financial Institutions (DIFI), who regulates insurance companies in Arizona, sets similar guidelines.

In most cases, the license is subject to periodic renewal. Much like the application process, the renewal phase involves a thorough examination by those who regulate insurance companies in the U.S.

National Association of Insurance Commissioners 

What agency regulates insurance companies? Although insurance companies are not regulated on a federal level, the state legislatures that govern insurance in the U.S. are moderated by a federal agency. This auto insurance association that oversees insurance companies is called the National Association of Insurance Commissioners (NAIC).

Why was the National Association of Insurance Commissioners created? Having federal oversight over auto insurance businesses in the country gives drivers peace of mind when shopping for and buying auto insurance. It provides a uniform approach so customers can expect trustworthy coverage from reliable auto insurance companies in all 50 states.

The federal association periodically brings the heads of each state insurance regulation department together on a semi-annual basis. The assembly offers the state car insurance regulatory authority a chance to unify procedures and policies and share ideas without official federal oversight.

At this time, regulators discuss what has worked and not worked for them, as well as the companies that should be rewarded or penalized. Commissioners can also take what they’ve learned back to their states to discuss with their departments.

How the Consumer Regulates Insurance Companies

Individual state regulators ensure insurance companies act with honesty and fairness. But consumers play a significant part in who supervises insurance companies, too.

What role do consumers play in regulating insurance companies? Consumers can quickly check company reputations, prices, offers, and practices thanks to online insurance comparison tools and easy access to information.

Today, the ability to instantly buy auto insurance online gives us an easy view of the most robust, affordable policies and help us pay attention to the fine print. Thanks to online comparison tools, the consumer can choose auto insurance with peace of mind.

As providers develop a reputation for excellent service, they tend to become known for outstanding reviews, testimonials, and the number of happy customers. Over time, companies offering less competitive services either get left behind or must reform to attract and keep more customers.

The Bottom Line on Who Oversees Auto Insurance Companies

Who oversees car insurance companies? The federal government does not regulate auto insurance companies.

Auto insurance regulation is carried out by individual state regulators. Insurance company regulators in each state make sure companies provide fair coverage by issuing and overseeing state licenses. Without a license, car insurance agencies and companies can’t operate in their state.

Along with state regulators, the individual plays a vital role in ensuring auto insurance providers offer outstanding service. Automobile insurance agencies are subject to customer reviews and ratings, which are moderated by the NAIC, a federal car insurance governing body. 

Take control of your auto insurance and start comparing quotes from regulated insurance companies in your city. Get free insurance quotes with our comparison tool below.