Raymond A. Guenter - Fundamentals of Insurance Regulation: The Rules and the Rationale

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The materials contained herein represent the opinions of the authors and/or the editors, and should not be construed to be the views or opinions of the law firms or companies with whom such persons are in partnership with, associated with, or employed by, nor of the American Bar Association or the Section of Tort, Trial, and Insurance Practice unless adopted pursuant to the bylaws of the Association.

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Library of Congress Cataloging-in-Publication Data

Names: Guenter, Raymond A. | Ditomassi, Elisabeth, author.

Title: Fundamentals of insurance regulation / Raymond A. Guenter and Elisabeth Ditomassi.

Description: Chicago : American Bar Association, 2017. | Includes index.

Identifiers: LCCN 2017004884 | ISBN 9781634256889 (softcover : alk. paper)| e-ISBN: 978-1-63425-689-6

Subjects: LCSH: InsuranceState supervisionUnited States.

Classification: LCC KF1167 .G84 2017 | DDC 346.73/086dc23

LC record available at https://lccn.loc.gov/2017004884

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Contents

About the Authors

Raymond Guenter is a member of the faculty of Boston University School of Laws Morin Center for Banking and Financial Law Studies, where he has taught Government Regulation of Insurance for the last 20 years. He has also taught Banking Law and Regulation as a lecturer-in-law at the University Of Connecticut School Of Law.

He has been of counsel to the Bergen Law Offices, L.L.C., Albuquerque, New Mexico, for the past 13 years. During 10 years of that association, the Bergen firm represented Amerind Risk Management, a risk pool organized under 12 U.S.C. 477, that offers a variety of insurance products to over 250 Indian tribes, their housing authorities and tribal businesses as well as to individual tribal members. The firm has provided counsel on a broad range of insurance issues including insurance defense work, development of policy forms, corporate structure and the application of federal, state and tribal insurance regulations.

He served as Executive Vice President and General Counsel of Shawmut National Corporation, a regional bank holding company, from 1976 until 1994.

He is a member of the Executive Committee of the Connecticut Bar Associations Financial Institutions Section and is a member and past Co-Chair of the Boston Bar Associations Banking Law Committee.

He is a Phi Beta Kappa graduate of Syracuse University, and received his LL.B. degree from Harvard Law School.

Publications include: The Insurance Industry and Its Products, ABA-CLE program on Insurance Regulation, November 8, 2001; Rediscovering The McCarran-Ferguson Acts Commerce Clause Limitation, 6 Connecticut Insurance Law Journal 255 (2000); Bank Insurance PowersYesterday, Today and Tomorrow, 17 Annual Review of Banking Law 351 (1998), cited in Bay State Savings Bank v. Baystate Financial Services, LLC., 484 F Supp. 205 (2007), Goldstein v. Savings Bank Life Ins. Co. of Massachusetts, 21 Mass. L. Rptr. 204 (2006) and Bay State Savings Bank v. Bay State Financial Services, LLC, 338 F. Supp. 2d 181 (2004); and The Lance LegacyTitle VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978, 96 Banking Law Journal 292 (1979).

Elisabeth Ditomassi is a member of the faculty of Boston University School of Laws Morin Center for Banking and Financial Law Studies, where she has taught Government Regulation of Insurance since 2008.

Currently she is Head of Compliance and Regulatory Affairs for North America for a large global insurer. The insurer offers specialty property and casualty coverages in the insurance and reinsurance markets worldwide and in Lloyds markets throughout the world through its Lloyds Syndicate. Prior to this position, she acted in a similar capacity for another global specialty lines insurer, where she further served as the groups Global Compliance Head, overseeing regulatory activities in 10 countries through the Lloyds market.

Elisabeth previously spent seven years as a Deputy Commissioner and General Counsel for the Massachusetts Division of Insurance where she served three commissioners. One of the highlights of her tenure as a regulator included the period when the division successfully converted the countrys last remaining fix-and-establish private passenger automobile market to a competitive market. She also presided over or supervised all major financial transactions that came before the division, including mergers and acquisitions and redomestications of insurance companies in addition to advising on the Massachusetts Health Care Reform Act which became the blueprint for the federal Affordable Care Act.

She spent the early part of her legal career litigating commercial disputes in Fox, Horan, Camerini, LLP in New York and prosecuting public corruption cases within in the Office of the Attorney General of Massachusetts.

Elisabeth was appointed by the Massachusetts Supreme Judicial Court to a four-year term as a member of the Massachusetts Board of Bar Overseers in 2009. The Board oversees administrative disciplinary actions brought against Massachusetts attorneys charged with misconduct.

Currently, she is a member of The Boston Club, which is one of the most comprehensive associations of executive women and leaders in the Northeast. The clubs primary mission is to promote the advancement of women in leadership roles.

She is a graduate of Tufts University and received her Juris Doctor from the Boston University School of Law.

Elisabeth speaks on conference panels several times per year on such insurance issues as global regulatory convergence, emerging trends in insurance regulation, federal versus state regulation, and corporate governance.

Preface

The purpose of the book is to provide the reader with an understanding of the complex state-based regulatory system that governs the insurance industry in the United States. Imparting that understanding certainly requires the presentation of applicable statutes, regulations, and judicial decisions, but a good deal more is required to complete that mission. All regulatory systems are shaped by the subject matter they regulate. Insurance is no exception. Information is provided about the industrys products, its operating procedures, distribution channels, and financial characteristics and performance. To round out the picture the book describes the regulatory processits core objectives, how and by whom policy is formulated, and how the rules are enforced.

State insurance regulators enforce rules governing such matters as the maintenance of adequate capital and the prompt and equitable treatment of policyholder claims. They are also expected to see that the market for insurance products within their respective states are robust, providing consumers with access to the products they need, but at the same time seeing that key insurance products are affordable. The same regulators are tasked with handling the rehabilitation and liquidation of troubled insurance companiesa job which requires making difficult decisions and is markedly distinct from such process as to other financial institutions in the United States.