Insurance regulation in transition

The significant increase in the frequency and size of insurer failures in the latter part of the 1980s and other recent market problems have raised serious concerns about the adequacy of the states' regulatory oversight of the insurance industry. The industry's cost pressures, greater financial risk, and expanding geographic scope have forced the states to dramatically revamp the insurance regulatory framework. These efforts include strengthening financial standards, expanding financial reporting, improving monitoring tools, accrediting insurance departments, and streamlining market regulation. This article reviews the recent changes in state insurance regulation, as well as the economic and political forces that have influenced their direction. Industry criticisms of some of these regulatory reforms also are discussed.