The insurance company, sitting in the driver's seat, selects and controls the property risk. It receives in advance, premiums sufficient to pay all losses and claims for which it may become obligated. Its expenses of operation, including advertising, are paid from the policyholder premiums and are separate from its investment income. Because of this privileged position and since the property insurance contract is a contract of adhesion with no choice by the policyholder, courts have generally held policy wording more favorably for the policyholder. However, this balance may be more difficult to enact in the future as policy wording is eliminated that protects the policyholder and new wording replaces old decidedly in favor of the insurance company. This most recent process is very real and ongoing and should be of great concern to all policyholders, but should be of even greater concern to the Insurance Commissioners who would allow this decimation on their watch. Hopefully these changes are not by design of these authorities, but were authorized without the realization of the implications and ramifications. These major changes can only be reversed if the authorities' pledge to protect the interests of the policyholder comes to the fore. Even then it will be a very long road, but one that cannot be traveled without their allegiance and commitment.
A Commissioner of Insurance, appointed in thirty eight of the states and elected in the remaining twelve, oversees the activities of insurance companies that are licensed to operate in each state. The Commissioner heads the Department of Insurance of that particular state and is responsible for evaluating reserve requirements of companies (the amount set aside for claims), and for protecting consumers against unfair marketing or claims practice.
The stock market crash of 1929 was a dire emergency for insurance companies as it was for all other businesses. The State Commissioners of Insurance allowed stock insurance companies to use financial statements showing closing market figures for stocks and bonds as of an earlier date. Had the updated figures been utilized, most fire insurance companies would have been technically insolvent. Mutual companies, on the other hand, with mostly municipal, state and national bonds which held their values on the security markets, did not need to avail themselves of the Insurance Commissioners' propped up values.
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