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Regulation of Insurance and Real Estate

Insurance Regulation

Insurance companies and their agents are primarily regulated by the insurance department of the states in which they are licensed to do business. However, insurance companies have diversified their products so much that they may also fall under the jurisdiction of other regulatory bodies such as the Securities and Exchange Commission (SEC) or National Association of Security Dealers (NASD). For example, an ordinary life insurance policy must meet state requirements and is regulated by the state only, but a variable life insurance policy also has an investment component that falls under the NASD rules.

There is diversity of rules from one state to another.

Each state has a commissioner of insurance who makes sure that insurance companies licensed in his or her state meet the state's rules and regulations for policy provisions as well as lawful sales practices. Since each state regulates its own insurance companies, there is diversity of rules from one state to another. In fact, it is common to find that an insurance company has different policies offered in different states. The National Association of Insurance Commissioners (NAIC) is an organization of insurance regulators from all 50 states who try to develop uniform rules and regulations when appropriate.

Insurance salespersons must be licensed by the states in which they sell insurance. They are regulated by the states' department of insurance and supervised by the insurance companies or brokers for whom they are an agent. In most states, agents must pass an examination to be licensed and must meet continuing education requirements for license renewal.

For more information about your state's insurance department, search the Internet for your insurance commissioner (www.loc.gov/rr/news/stategov/stategov.html) or visit the NAIC at www.naic.org/cis/.

Real Estate Regulation

Real estate law is very complex, and property ownership is jealously guarded in most states. It is only natural that each state regulates its own real estate transactions and sales practices. It is not as if you can take the real estate with you if you leave the state.

In every state, real estate brokers and agents must be licensed. Licensing requires education in basic real estate law, and passing an examination, as well as other qualifications the state may require, such as age and education level. Licenses must be renewed every one or two years, and many states require continuing education for re-licensing.

Real estate contracts provide specific rights to buyers and sellers, renters, and landlords. It is the realtors' responsibility to be sure that the parties in a real estate transaction are cognizant of their rights and responsibilities.