The principal purpose of state regulation in the insurance industry is to:
3. Help ensure the solvency of insurance companies.
State regulation plays a crucial role in overseeing the financial stability and solvency of insurance companies. By setting and enforcing financial requirements, such as capital reserves, states aim to protect policyholders from the risk of insurance companies becoming insolvent and unable to fulfill their financial obligations. This regulatory oversight helps maintain the stability of the insurance market and safeguard consumers' interests.
