Insurance regulation in a nutshell

Section IV.2.Regulation of Rates

Regulation of policy rates (premiums) varies by state and by kind of insurance. Property/casualty rates may be subject to prior approval, “file and use” and “use and file” regulatory schemes.
Under New York law, rates for workers’ compensation, personal automobile insurance and certain other kinds of insurance are subject to prior regulatory approval.⁵⁷ Rates for other property/casualty kinds of insurance are subject to filing with the state insurance regulator prior to use.⁵⁸ In addition, New York law subjects property/casualty rates in problem markets designated by the state insurance regulator to so-called “flexible rate limitations” – rate changes below the threshold are not subject to prior regulatory approval but rate changes above the thresholds are subject to prior regulatory approval.⁵⁹ The New York rating law for property/casualty insurance provides that:
Rates shall not be excessive, inadequate, unfairly discriminatory, destructive of competition or detrimental to the solvency of insurers.⁶⁰
Under New York law, premiums for individual and small group accident and health insurance are subject to prior regulatory approval.⁶¹ Again, the standard for disapproval is quite broad:
The superintendent may refuse such approval if he or she finds that such premiums are excessive, inadequate, or unfairly discriminatory.⁶²

Section IV.3.Unfair Trade Practices

Most states have laws that prohibit insurers from engaging in “unfair trade practices.” The NAIC Unfair Trade Practices Act was one of the first NAIC model laws, having been first adopted in 1947 shortly after enactment of the McCarran-Ferguson Act in 1945 (see Section I.5.).
The Model Act provides that:
It is an unfair trade practice for any insurer to commit any practice defined in Section 4 of this Act if:
A. It is committed flagrantly and in conscious disregard of this Act or of any rules promulgated hereunder; or
B. It has been committed with such frequency to indicate a general business practice to engage in that type of conduct.⁶³
Among the kinds of practices defined in Section 4 of the Model Act are these: (i) misrepresentation and false advertising of insurance policies, (ii) unfair discrimination in premiums, policy terms and conditions or policy benefits, (iii) boycott, coercion and intimidation, (iv) redlining, (v) discrimination based on race, color, creed or national origin, sex or marital status, and (vi) rebating.⁶⁴
Violation of the law may result in an order by the state insurance regulator for the insurer to cease and desist from engaging in the prohibited acts and monetary penalties.⁶⁵
Even though the Model Law provides that “Nothing herein shall be construed to create or imply a private cause of action for a violation of this Act.,”⁶⁶ few state insurance unfair trade practice statutes expressly forbid a private right of action for violation of the statute. Courts have considered whether these statutes contain an implied private right of action. Few courts have concluded that there is an implied right of action for violation of the unfair trade practice statutes. The majority rule is that there is no private right of action.