Marketplace & Regulation

Other Regulatory Organizations




National Association of Insurance Commissioners


All state insurance commissioners or directors are members of the National Association of Insurance Commissioners (NAIC). This organization has standing committees that work regularly to examine various aspects of the insurance industry and to recommend appropriate insurance laws and regulations. The NAlC has four broad objectives:


¨ to encourage uniformity in state insurance laws and regulations;

¨ to assist in the administration of those laws and regulations by promoting efficiency;

¨ to protect the interests of policyowners and consumers; and

¨ to preserve state regulation of the insurance business.


The NAIC has been instrumental in developing guidelines and model legislation that help ensure that the insurance industry maintains a high level of public trust by conducting its business competently and fairly. This group also develops standards for policy provisions, helping ensure that policies become more uniform across the country.   The NAIC has no enforcement powers.  Notable among the NAIC's accomplishments was the creation of the Advertising Code and the Unfair Trade Practices Act, which have been adopted in some form by every state.



Advertising Code


A principal problem facing states in the past was regulating misleading insurance advertising and direct mail solicitations. Many states, including Florida, now subscribe to the Advertising Code developed by the NAIC. The Code specifies certain words and phrases that are considered misleading and are not to be used in advertising of any kind. The Advertising Code requires full disclosure of policy renewal, cancellation and termination provisions. Other rules pertain to the use of testimonials, statistics, special offers and the like.



Unfair Trade Practices Act


The McCarran-Ferguson Act exempts insurance activities from federal anti-trust laws – “to the extent they are governed by state law.”   Shortly after passage of McCarran Ferguson, each state passed laws to address this concern and preserve state regulation of insurance.  Most jurisdictions, including Florida, have adopted some version of the NAIC's Model Unfair Trade Practices Act. This act gives state regulatory officers the power to investigate insurance companies and producers, to issue cease and desist orders and to impose penalties on violators. The act also gives officers the authority to seek a court injunction to restrain insurers from using any methods believed to be unfair or deceptive. Included in the context of unfair trade practices are misrepresentation and false advertising, coercion and intimidation, unfair discrimination, and inequitable claims settlements.



Other Model Laws


The NAIC has been instrumental in crafting model legislation that most states have enacted.  Recently Congress has relied on the NAIC to promote greater nationwide uniformity in the fields of Medicare supplemental insurance, long-term care policies and state reciprocity of agent licenses.  One recent NAIC Model law of is of particular interest to agents selling annuities:  the Suitability in Annuity Transactions Model Regulation, which addresses agent training and supervision.  This model law focuses on "senior consumers" and requires agents to adequately document the suitability of their recommendations to those age 65 or older.  The NAIC is in the process of expanding the scope of this law to cover all consumers regardless of age.  To date, Florida has adopted a version of the "senior customer" version of this model act the details of Florida's law are covered in Chapter 6.




Insurance Marketplace Standards Association (IMSA)


The purpose of the Insurance Marketplace Standards Association (IMSA) is to promote high ethical standards in the sale of individual life insurance, annuity products and long-term care insurance by its member companies. With more than 200 voluntary member insurance companies, IMSA demonstrates the firm commitment to ethical market conduct that a large portion of the insurance industry has made. IMSA delineates its standards of ethical market conduct through six principles: each of which is supported by several codes. In order to join IMSA, an insurance company must go through two assessments (one internal and one third-party) to demonstrate that it upholds these codes. This process must be repeated every three years. The principles and codes demand that each member company promote ethical standards to its producers.   






The National Association of Insurance and Financial Advisors (NAIFA) and the National Association of Health Underwriters (NAHU) are organizations of life and health insurance agents that are dedicated to supporting the life and health insurance industries and advancing the quality of service provided by insurance professionals. Each organization issues a Code of Ethics that stresses the high professional duty expected of underwriters toward their clients, as well as to their companies, and emphasizes that only by observing the highest ethical balance can conflict between these two obligations be avoided.   

Text Box: NAIFA Code of Ethics

Those engaged in offering insurance and other related financial services occupy the unique position of liaison between the purchasers and the suppliers of insurance and closely related financial products. Inherent in this role is the combination of professional duty to the client and to the company as well. Ethical balance is required to avoid any conflict between these two obligations.

Therefore, I Believe It To Be My Responsibility:
To hold my profession in high esteem and strive to enhance its prestige. 
To fulfill the needs of my clients to the best of my ability. 
To maintain my clients' confidences. 
To render exemplary service to my clients and their beneficiaries. 
To adhere to professional standards of conduct in helping my clients to protect insurable obligations and attain their financial security objectives. 
To present accurately and honestly all facts essential to my clients' decisions. 
To perfect my skills and increase my knowledge through continuing education. 
To conduct my business in such a way that my example might help raise the professional standards of those in my profession. 
To keep informed with respect to applicable laws and regulations and to observe them in the practice of my profession. 
To cooperate with others whose services are constructively related to meeting the needs of my clients.



The Florida Association of Insurance and Financial Advisors (FAIFA) fulfills a similar function in Florida.  FAIFA’s Code of Ethics specifically addresses misrepresentations, twisting, rebating, and defamation.  FAIFA's Code of Ethics has been adopted as part of the Department of Financial Services’ rules:


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Text Box: 69B-215.210 Scope.

The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential to a client’s decision, and by being fair in all relations with colleagues and competitors always placing the policyholder’s interests first.

69B-215.215 Twisting.

Twisting is declared to be unethical. No person shall make any misleading representations or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, or convert any insurance policy, or to take out a policy of insurance in another insurer.

69B-215.220 Rebating.

Rebating is declared to be unethical. Except as otherwise expressly provided by law, no person shall knowingly permit or offer to make or make any contract of life insurance, life annuity or disability insurance, or agreement as to such contract other than as plainly expressed in the contract issued thereon, or pay or allow, or give or offer to pay, allow, or give, directly or indirectly as an inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract.

69B-215.225 Defamation.

Defamation is declared  to be unethical and defined as making, publishing or circulating any oral, written or printed statement which is false, or maliciously critical of or derogatory to the financial condition of any insurance company, or which is calculated to injure any person engaged in the business of life insurance, and this practice is declared to be unethical.

69B-215.230 Misrepresentations.

(1) Misrepresentations are declared to be unethical. No person shall make, issue, circulate, or cause to be made, issued, or circulated, any estimate, circular, or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or make any false or misleading statement as to the dividends or share of surplus previously paid on similar policies, or make any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or use any name or title of any policy or class of policies misrepresenting the true nature thereof.

(2) No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.

Rating Services


While technically not a regulatory body in the traditional sense, rating services are private companies that review the financial strength and stability of insurance companies.  These are two vitally important factors to potential insurance buyers and to insurance companies themselves.  By publishing their assessment of financial strength, the ratings organizations help market forces guide insurance company decisions and operations.