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How is the insurance industry held accountable to protect policyholders?
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
January 21, 2025
Many don’t realize that the insurance industry is one of the country's most regulated business segments, especially in New York State. The New York State Department of Financial Services (NYS DFS) wields significant control over the insurance business and has a stated goal of protecting consumers.
But what authority does the NYS DFS actually have?
- Rate Approvals:
- It’s a little-known fact that the NYS DFS reviews every company’s rate change requests. They review those requests for actuarial reasonableness, ensuring they are not excessive, inadequate, or discriminatory. The DFS review includes rates for all lines of insurance, including auto, home, business, health, and life insurance.
- Regulatory Oversight:
- Supervision to make sure insurance companies and their representatives comply with state laws and regulations
- Licensing & Continuing Education:
- The NYS DFS tightly controls the licensing process to ensure only capable and trustworthy agents and companies operate in the state. This is part of their commitment to consumer protection.
- Monitors and requires continuing education for licensed agents.
- Policy Language Suitability.
- Another crucial role of the NYS DFS is to ensure the suitability of policy language. Insurance companies must submit their policy forms and guidelines for approval before using them in their policies. This approval process, overseen by the DFS, prevents the use of inappropriate coverage forms that could disadvantage consumers, thereby ensuring the security of your insurance policies.
- Consumer Protection & Education:
- The enforcement of laws and regulations protects consumers from nefarious schemes and unfair trade practices.
- Provides a mechanism for consumers to submit complaints when there are disputes with representatives and carriers.
With recent events, some may be concerned that the insurance industry operates without much oversight. The opposite is the case. New York State has a reputation for being strongly pro-consumer and a challenging environment for insurance companies and agencies. All with the stated purpose of protecting the consumer.
Frequently Asked Questions About , the insurance industry held accountable to protect policyholders?
What governing body primarily oversees the insurance industry in New York State, and what is its main objective?
The New York State Department of Financial Services (NYS DFS) is the primary regulatory body overseeing the insurance industry in New York. Its main objective is to protect consumers. This is done through rigorous oversight of insurance companies and their representatives, ensuring compliance with state laws and regulations.
How does the NYS DFS ensure that insurance rates are fair?
The NYS DFS reviews every insurance company's rate change requests. These requests are carefully analyzed for "actuarial reasonableness" to make sure rates are not excessive, inadequate, or unfairly discriminatory. This review process applies to all lines of insurance, including auto, home, business, health, and life insurance.
What role does the NYS DFS play in licensing and training insurance professionals?
The NYS DFS tightly controls the licensing process for both insurance agents and companies, ensuring that only capable and trustworthy individuals and entities operate within the state. Additionally, they monitor and require continuing education for licensed agents to ensure they remain knowledgeable and competent in their field, which helps to maintain a high level of consumer protection.
How does the NYS DFS ensure that insurance policy language is fair and suitable for consumers?
Insurance companies are required to submit all policy forms and guidelines to the NYS DFS for approval before they can be used. This review process ensures that policy language is clear and prevents the use of inappropriate coverage forms that could potentially disadvantage consumers, protecting the validity and security of insurance policies.
What measures does the NYS DFS take to protect consumers against unfair practices?
The NYS DFS enforces laws and regulations to safeguard consumers from unethical schemes and unfair trade practices within the insurance industry. They also provide a channel for consumers to file complaints when disputes arise with insurance representatives or carriers, ensuring a mechanism for redress and dispute resolution.
Is the insurance industry in New York State largely unregulated?
The assertion that the insurance industry in New York operates without much oversight is incorrect. New York State is known for its strong consumer protections and is considered a challenging environment for insurance companies and agencies because of the regulatory environment and active enforcement by the NYS DFS.
What types of insurance policies are subject to the NYS DFS's regulatory oversight?
The NYS DFS regulates all lines of insurance, including but not limited to auto, home, business, health, and life insurance. This comprehensive oversight ensures that all insurance products available in the state meet regulatory standards and offer appropriate consumer protections.
In what ways does the NYS DFS actively work to protect the interests of consumers in the insurance market?
The NYS DFS actively protects consumer interests through a variety of actions, including rate review and approval, stringent licensing and continuing education requirements for industry professionals, oversight of policy language and forms, and the enforcement of regulations that prevent unfair practices. They also facilitate complaint resolution mechanisms, all of which contribute to a robust consumer protection framework in New York State.
"How is the insurance industry held accountable to protect policyholders?" Deep Dive Podcast
The content in this article, including the podcast and FAQ, was created by the staff at The Ryan Agency, with portions generated using artificial intelligence. This information is for general informational purposes only and should not be relied upon as professional advice. For guidance specific to your situation, please consult your policy documents and an insurance professional. The Ryan Agency, Jeff Ryan, and our staff expressly disclaim any liability for actions taken or not taken based on this content without consulting your policy or an insurance professional.
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The year 1962 was marked by historic events—from the Cuban Missile Crisis to the passing of Marilyn Monroe. But while the world focused on these headlines, Lee A. Ryan was working alongside his brothers on my grandparents' farm when an unexpected opportunity arose—an invitation to join the insurance business. With no prior experience, no clients, and limited resources, my dad took a leap of faith and partnered with Nationwide Insurance to start an agency from scratch. Operating out of his home on Karr Valley Road in Almond, NY, he built his business one relationship at a time (some of whom are still clients!), laying the foundation for what would become a lasting legacy.
“Am I covered if I drive someone else’s car?” Or, “Am I covered if someone else drives mine?”
Most property insurance companies offer Actual Cash Value or Replacement Cost settlement options. Typically, insurance companies will require that you insure the property to the settlement value you choose. If you select Actual Cash Value, the amount you may be required to insure the property for will be less than the corresponding Replacement Value.
In that spirit, the Ryan Agency is sponsoring a Stearns BBQ Dinner pickup at our office on 57 Broadway Mall in Hornell on September 12th from 3:00 PM to 4:30 PM.
Today, an individual’s credit history can play a more significant role than any one of those traditional factors. Good Credit Scores lead to a Positive Insurance score. A good Insurance Score greatly influences what someone will pay to insure their vehicles.
Insurance companies offer various discounts for which their policyholders may qualify.
Great Eight number Six (6) suggests taking a look at removing Comprehensive and Collision on Older Vehicles.
By reducing the number of claims in your insurance history, you can significantly affect your rates in the future.
Sometimes, this concept meets with resistance from policyholders. The thought of paying more in the event of a claim is off-putting to some. Even if that means I pay more for my insurance.
OK. Admittedly, this strategy doesn't benefit everyone, but it can be very beneficial for those it does. You may have unique home or auto insurance needs that prevent you from bundling with the same company. Alternatively… you might have a better rate without the bundle discount by splitting up your insurance between multiple carriers.
