Insurance Law: Understanding the United States legislation

en English

Insurance Law is the collection of laws generally applicable to insurance policies, claims, premium, regulations and rates.

An example of a recently enacted Insurance Law is the Affordable Care Act (ACA). The ACA is also dubbed as Obamacare. It is a United States Federal Statute enacted by the 111th Congress of the United States and signed into law by President Barack Obama on March 23, 2010.

Insurance Law

Categories of Insurance Law

In the United States of America, Insurance law is mainly divided into three major categories: the handling of claims, business of insurance, and the content of insurance policies.

  • Handling of Claims

Legislation relating to Handling of Claims are laws that regulate and influence how and when insurance companies should react in the face of a claim by the insured or their beneficiaries or successors in title.

These laws prevent insurance companies from unjustly denying claims, by the provisions that protect the insured. Rules for the handling of claims also operate to prohibit insurance companies, in specific situations from cancelling insurance policies merely because the insured made claims. Insurance Law for handling of claims prescribes procedures for making claims and consequences for fraudulent claim attempts.

  • Business of Insurance

Enactments made for the Business of Insurance are laws regulate the requirements for promotion, establishment, and operation of an insurance company as it applies to the United States insurance industry. These enactments may vary from state to state as the specific requirements may not be uniform.

Enactments made for the Business of Insurance generally provide and regulate the amount of minimum liquidity which a prospective Insurance Company must have to cover claims of the insured in the event of catastrophic events or natural disasters before a license can be issued.

The Business of Insurance generally governs licensing insurance companies, issuance and withdrawal of licenses, regulations that pertain persons or things that cannot be insured, types of insurance a company must offer within a specific jurisdiction, situations where an insurance company desires to offer specific and mixed policies and matters ancillary to others mentioned above.

  • Content of Insurance Policies

There are also laws that regulate the Content of Insurance Policies. These Laws control what a policy should or should not contain. It is designed to prevent predatory and greedy practices by insurers who surreptitiously intend to offer worthless or reduced value policies. These laws also prohibit insurers from the inclusion of ambiguous, misleading or deceptive clauses and titles on policies which may subject the intentions of the policy to multiple interpretations but unknown to a primitive buyer who will be misled to believe that they are buying a specific type of insurance but end up receiving something different.

Laws govern Content of Insurance Policies also regulates other provisions such as reasonable cancellation, disclosures to third parties, and delineations of insured and uninsured events.

Insurance Law

Affordable Care Act (Obamacare)

The Patient Protection and Affordable Health Care Act, commonly referred to as Affordable Care Act or “Obamacare” is an all-encompassing set of Federal Laws intended to boost the quality and affordability of health insurance, lower the rate of uninsured Americans by increasing public and private insurance coverage, and reduce the costs of healthcare for both individual citizens and the government.

The set law can achieve its purposes through a number of mechanisms such as mandates, subsidies, and insurance exchanges aimed at promoting coverage and affordability. The Affordable Care Act mandatorily requires insurance companies to cover all applicants irrespective of whether or not they have preexisting medical conditions and without regard to gender in as much as the person meets the new basic standards for coverage.

Legal challenges

The ACA has been a hot-button issue for political controversy. Consequently, some antagonists have challenged the constitutionality of ACA in multiple lawsuits on multiple grounds.

The United States Supreme Court on a 5–4 vote, upheld the constitutionality of the ACA  Affordable Care Act in the case of National Federation of Independent Business v. Sebelius; the Court held that the individual mandate was constitutional when analysed as a tax, although not under the Commerce Clause. Nevertheless, the Court also held that states could not be forced to participate in the ACA’s Medicaid expansion by withholding all Medicaid funding from States who decline to participate in the expansion.

Politicians have continued to fiercely contest the performance of the law as well as a proposal by conservatives of the Congress to compel a repeal of the law by exercising Congress’s “purse power” and allowing a brief federal government shut down to occur in 2013 rather than pass a budget that included funding for the implementation of the Act.

For more information or legal counsel or how to go about your claims, consult an Insurance Attorney. Read our article: Top 20 Law Firms in America.

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