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Trieschmann, Hoyt & Sommer

Risk Management and Insurance

Unit 10 – The Risk Management Environment

Source Material

• Trieschmann J., Sommer, D. & Hoyt, R. E. (2004). Risk

Management and Insurance 12th Edition. KY: South-

Western College

The Field of Insurance

• Insurance coverages can be divided into various opposing categories:

– Personal (life and health) vs property (buildings, homes, autos)

– Government (federal, state, flood insurance) vs private (product liability)

– Involuntary (Social Security) vs voluntary (fire insurance)

• The categories are not mutually exclusive and they may overlap.

Figure 22-1: Major Classifications of Insurance

Personal and Property Coverages

Personal Coverages

• Those related directly to the individual. – The risk they cover is the possibility that some peril may interrupt the individual’s

income, such as death, accidents and sickness, unemployment, and old age.

– Private insurers are active in providing insurance for death, accidents, sickness, and old age

Property Coverages

• Directed against perils that may destroy property that is already acquired – Property insurance as used here includes fire, marine, liability, casualty, and

surety insurance.

– Sometimes referred to as general insurance, property/liability insurance, or property and casualty insurance.

Private and Public Insurance

• Private insurance consists of all types of coverage written by privately organized groups.

– It consists of associations of individuals, stockholders, policyholders, or some combination of these.

• Public insurance includes all types of coverage written by government bodies (federal, state or local) or operated by private agencies under government supervision.

Voluntary and Involuntary Coverages

• Most private insurance comes under the rubric of voluntary coverage; some may be required by law (auto insurance and workers’ compensation).

• A major part of government insurance is involuntary coverage.

– This is because it is required by law that insurance be purchased by certain groups and under certain conditions.

Types of Insurers

• Insurers are generally classified according to ownership arrangements. Four distinct types are: stock companies, mutual companies, reciprocals and Lloyd’s Association.

Stock Companies

• A corporation organized as a profit-making venture in the field of insurance – They are organized with authority to conduct certain types of insurance business

and can be authorized to deal in all types of insurance under multiple-line laws.

• They usually, but not always, operate by setting a fixed rate with the approval of the insurance commissioner.

• Some pay dividends to policyholders on certain types of insurance.

• Stock companies never issue what is called an assessable policy. – That is, the insured cannot be assessed with an additional premium if the

company’s loss experience is excessive.

• The stockholders are expected to bear any losses and they also reap any profits from the enterprise.

Types of Insurers

Mutual Companies

• These are organized under the insurance code of each state as a nonprofit corporation and is owned by the policyholders.

• It has no stockholders.

• No profits are made – Because any excess income is returned to the policyholder-owners as dividends

• Or is used to reduce premiums, or retained to finance future growth.

• The company is managed by a board of directors elected by the policyholders.

• The bylaws of a mutual may provide for additional assessments to policyholders in the event that funds are insufficient to meet losses and expenses.

• Many types of mutual organizations exist and operate under different laws and with different types of businesses.

Types of Insurers: Mutual Companies

Class Mutuals • Operate in only a particular class of insurance

– Such as farm and property, lumber mills, factories, or hardware risks

• Farm mutuals – Specialize in farm property insurance

– Insure a large portion of farm property in some states, primarily because of the specialized nature of the risks.

– Farm mutual operate on assessment plans and each policy holder is bound to a pro-rata share of all losses and expenses of the company.

• Factory mutuals – Specialize in insuring factories

– Place emphasis on loss control

– Generally do not solicit small risks due to the relatively high cost of inspection, engineering services, surveys, and consultations that are provided by the organization in an attempt to prevent losses before they occur.

Types of Insurers: Mutual Companies

General Writing Mutuals

• One that accepts many types of insureds

• They require an advanced premium calculated on roughly the same basis as that of a stock insurer.

• They operate in several states or even internationally.

• They may or may not pay a refund of the portion of the premium of the dividend if experience warrants it.

• Many mutuals insist on relatively high underwriting standards – Taking only the best risks so that a dividend will more likely be paid

• Some mutuals are both participating and deviating – That means they plan to cut the initial rate somewhat below stock company levels and to

pay dividend if warranted.

Types of Insurers: Mutual Companies

Fraternal Carriers

• Designed as a nonprofit corporation, society, order, or voluntary association, without capital stock, organized and carried on solely for the benefit of its members and their beneficiaries

• They offer only life and health insurance.

• Fraternal carriers have a lodge system with a ritualistic form of operation and a representative form of government that provides for the payment of benefits in accordance with definite provisions in the law.

• As charitable, benevolent associations, they usually are exempt from taxation.

Types of Insurers

Reciprocals

• Sometimes called an interinsurance exchange.

• Similar to mutual in that both are formed for the purpose of making the insurance contract available to policyholders at cost (no profits).

• Basic differences exist between the legal control and capital requirements of reciprocals and mutuals. – In a reciprocal, the owner-policyholders appoint an individual or a corporation

known as an attorney-in-fact to operate that company, as opposed to the board of directors

– A mutual is incorporated with a stated amount of capital and surplus

• Whereas a reciprocal is unincorporated with no capital as such

• Reciprocals operate mainly in the field of automobile insurance.

Types of Insurers

Lloyd’s Associations

• An organization of individuals joined together to underwrite risks on a cooperative basis.

• Each member assumes risks personally and does not bind the organization for these obligations.

• Each investor is individually liable for losses on the risks assumed to the fullest extent of personal assets – Unless the liability is intentionally limited.

• It is similar to reciprocals in that each underwriter is an insurer. – However, a reciprocal is composed of individuals who are both insurers and

insureds at the same time.

• Whereas a Lloyd’s association is a proprietary organization operated for profit

Types of Insurers: Lloyd’s Association

London Lloyd’s

• Lloyd’s of London started in 1688 as an informal group of merchants taking marine risks.

• Their operations are now worldwide and sold through brokers – Operate extensively in the United States largely in the surplus line

market • This market consist of risks that domestic insurers have rejected for one

reason or another.

• A at December 31, 2019 there were 93 underwriting syndicates. – Syndicates are groups of names (investors) that combine their

resources and employ a manager who determines which risks to insure.

Channels of Distribution in Insurance

• Many kinds of arrangements may be made to distribute

insurance contracts.

• For example, life insurance generally takes a short, direct

channel whereas property insurance normally uses a

long, indirect channel with one or more independent

intermediaries involved.

Direct Distribution in Life Insurance

• Life insurance is distributed in two main ways:

– Salaried group insurance representatives

– Individual insurance agents who usually work on commission

• Life insurance is also sold by direct contact with the consumers

through advertising, mail order, or the internet (direct response).

– The insurer maintains a one-on-one relationship with the insured.

Direct Distribution in Life Insurance

Group Insurance

• Life insurers offer many of their products on a group basis

– Under contracts covering groups of persons rather than individuals.

• Customers from group coverage are generally business firms.

• Persons employed to sell and service businesses usually receive a salary and bonus.

• The group representative often works closely with a commissioned agent who may first locate a potential customer for the group insurance and would receive a commission if the group representative succeeds in making the sale.

Direct Distribution in Life Insurance

Individual Agents

• Policies sold to individuals are usually handled by persons known as agents, underwriters, or financial planners.

• The agent or underwriter contacts the ultimate consumer and reports directly to the insurer or intermediary(general agent) who in turn reports to the insurer. – The general agent is an individual employed to hire, train, and supervise agents

at lower levels.

– The company normally is not bound by the general agent in putting a contract in force.

• The general agent exercises no control over the amount of premium, has no investment in inventory, does not own any business written, and has no legal right to exercise any control over policyholders once he or she leaves the employment of the company.

Reasons for Direct Distribution in Life Insurance

• The system of direct, or short channel distribution has grown in life insurance because of several basic factors:

– The insurer’s need to maintain close control over the policy product – due to its complicated nature, its long duration, and the fiduciary relationship required between the insurer and the insured.

– The insurer’s need to exercise control over sales promotion and competition - extra promotion and competition can represent the difference between mediocre rates of growth for the insurer.

– The infrequent purchase of life insurance – a buyer usually purchase life insurance infrequently, has an infrequent need for claims service and has little day-to-day contact with the agent regarding endorsements on policies, request for information, etc.

– The agent’s ability to make a better living through specialization – due to its technical nature, the most successful life insurance agent specializes in life, health and disability insurance as well as pension planning.

Functions of Insurers

• The functions performed by any insurer depend on: – The type of business it writes, the degree to which it has shifted certain duties to others,

the financial resources available, the size of the insurer, the type of organization used, etc.

• These functions, which are normally the responsibility of definite departments or divisions within the firm, are: – Production (sales)

– Underwriting

– Rate making

– Managing claims and losses

– Investing and financing

– Accounting and other recordkeeping

– Providing miscellaneous other services • Such as legal advice, marketing research, engineering, and personnel management

Underwriting

• Includes all the activities necessary to select risks offered to the

insurer in such a manner that general company objectives are

fulfilled.

• In life insurance, underwriting is performed by home or regional

office personnel;

– Who scrutinize applications for coverage and make decisions as to

whether they will be accepted;

– And by agents, who produce the applications initially in the field.

Underwriting

• In the property-liability insurance area agents can make binding decisions in the field; – But these decisions may be subject to post-underwriting at a higher level

because the contracts are cancelable on due notice to the insured.

• In life insurance, agents seldom have authority to make binding underwriting decisions.

• In all fields of insurance, agency personnel usually do considerable screening of risks before submitting them to home office underwriters.

The Objective of Underwriting

• The main objective is to see that the applicant accepted will not

have a loss experience that is very different from that assumed

when the rates were formulated.

• As such, certain standards of selection relating to physical and

moral hazards are set up when rates are calculated.

• The underwriter must see that these standards are observed

when a risk is accepted.

Policy Writing

• In property-liability insurance, the agent frequently issues the policy to the customer, filling out forms provided by the company – Or the form may be printed in the agent’s office on a printer controlled by the issuer’s

computer.

• A check to determine accuracy of the rates charged, whether a prohibited risk has been taken, and other matters is done by the examining section of the home office.

• In life insurance, the policy usually is written in a special department

– Whose main task is to issue written contracts in accordance with instructions from the underwriting department and to keep a register of them for future reference.

Conflict Between Production and Underwriting

• An apparent conflict of interest may arise between the underwriting department and an agent – because the underwriting department may have turned down business

that previously has been sold by an agent.

• Neither the agent nor the underwriter will profit long by writing underwriting that is: – Too strict

• W ill choke off acceptable business and may create unnecessary expenses in canceling business already bound by the agent.

– Too loose • Invites substantial losses such that the company may be forced to withdraw entirely

from a given line.

Rate Making

• Rate Making involves the selection of classes of exposure units on which to collect statistics regarding the probability and severity of loss.

• In life insurance, this task is relatively uncomplicated – because the major task is to estimate mortality rates according to age and

other factors such as sex, smoking, drinking habits, and occupation.

• In other fields, such as liability and workers’ compensation – elaborate classifications are necessary.

• Rate making is usually supervised by specialists known as actuaries.

• Once classes have been set up, rate making involves an estimation of costs including certain policy benefits or of changing policy provisions or underwriting rules, as well as the cost of writing business for which no data have been accumulated.

Rate Making

Makeup of the Premium

• The insurance rate is the amount charged per unit of

exposure.

• The premium is the product of the insurance rate and the

number of exposure units.

– Thus, in term life insurance, if the annual rate is $1.50 per

$1,000 of face amount of insurance

• The premium for a $1 million policy is $1,500

Rate Making: Makeup of the Premium

• The premium is designed to cover two major costs: – The expected loss, or the pure premium

• Determined by dividing the total expected loss by the number of exposures ($750,000/1000 cars = $750 per car)

– The cost of doing business, or the loading

• Includes such items as agents’ commissions, general company expenses, premiums, taxes and fees, and allowance for profit

• Gross Premium - the sum of the pure premium and loading – The loading is usually expressed as a percentage of the expected gross premium

– The pure premium is the estimate of loss cost

• The ratio of the loss cost to the gross premium is called the loss ratio.

Rate-Making Guidelines & Adequacy

• The rate should be adequate to meet loss burdens, yet not be excessive.

– An underwriter may reason that to have an adequate premium it is necessary to collect

an amount sufficient for all possible contingencies

• Whereas another underwriter may have a much different view of the size of these possible

contingencies.

– This problem arises because the insurance rate must be set before all the costs are known.

• If costs cannot be determined, the entrepreneur usually will insist that the contract of sale be subject to later adjustment to reflect the actual cost or will insist on a cost-plus type contract.

• The rate should allocate cost burden among insureds on a fair basis.

• The rate should encourage loss control among insureds, if possible.

• W hile these criteria seem simple enough, applying them raises many difficult problems.

Rate-Making Methods

• The calculation of an insurance rate is in no sense

absolute or completely scientific in nature.

• The scientific method in insurance makes its greatest

contribution in narrowing the area within which executive

judgment must operate

Rate-Making Methods

Manual or Class (Pure) Method • Sets rates that apply uniformly to each exposure unit falling within some predetermined

class or group.

– Everyone falling within a given class is charged the same rate.

• The major areas of insurance that emphasize use of this method are

– Life, workers’ compensation, liability, automobile, health, homeowners’, and surety

Loss Ratio Method • It may be impractical to employ the manual rating method in developing a rate

– because of too many classifications and sub-classifications resulting in insufficient exposure on which to base decisions from a statistical point of view.

• The new rate is developed by comparing the actual loss ratio of the combined group with the expected loss ratio.

Rate-Making Methods

Individual or Merit Rating Method

• Recognizes the individual features of a specific risk and gives a rate that reflects the particular hazard. – One generally used device is to set up special rating classes

for which discounts from the manual rates are made either beforehand in the form of a direct deviation or as a dividend payable at the end of the period.

• Schedule Rating

– Each individual building is considered separately and a rate is established for it based on the rate credits given for good physical features in the form of a listing, or schedule. A prime example is fire insurance where each building is considered separately.

Rate-Making Methods

Combination Method

• In many lines of insurance, a combination of manual and merit rating is used in different degrees.

• The rate maker may develop an annual rate and then proceed to set up a system whereby individual members of a group may qualify for reductions from the manual rate – If certain requirements are met.

• They may be subjected to increased rates under certain other conditions.

Credibility

• Refers to the degree to which the rate maker can rely on the accuracy of loss experience observed in any given area.

• For example, if the loss ratio on policies in a geographical area indicates that losses have been considerably higher than anticipated

• Should future rates be based on the experience of these losses

– Or is there a considerable likelihood that the previous year produced higher-than-average losses only by chance?

• It is not fair for one group to subsidize another group if each group is large enough to develop a loss experience that is reasonably credible.

Rate-Making Associations

• Also called rating bureaus.

• The largest bureau is Insurance Services Organization (ISO)

• This type of cooperation is quite essential. – Many companies do not have a sufficiently large volume of business in certain

lines to enable them to develop rates that are statistically sound.

• When the experience of many companies is pooled, a large enough body of data is available to permit a higher degree of credibility.

• Rate making bodies have worked toward uniform policy provisions

and standard policies.

• ISO develops statistical data for use by its member companies in the

calculation of rates in various lines of property and liability research.

Reinsurance

• Reinsurance is a method created to divide the task of handling risk among several insurers.

• Often accomplished through cooperative arrangements, called treaties

– specifying the ways in which risks will be shared by members of the group.

• Reinsurance companies purchase reinsurance from one another on specific kinds of risks

– so a catastrophic loss in one part of the world may affect insurance companies and policyholders everywhere.

• Reinsurance may be defined as the shifting, by a primary insurer (ceding company) of a part of the risk it assumes to another company (reinsurer)

– That portion of the risk kept by the ceding company is called the line, or retention

– That portion shifted to the reinsurer is called the cession

• The process by which a reinsurer passes on risks to another reinsurer is known as retrocession.

Types of Reinsurance Agreements

Facultative Reinsurance

• The simplest form is Informal facultative reinsurance or what is called Specific reinsurance on an optional basis. – Under this, a primary insurer shops around for reinsurance attempting to negotiate

specific coverage on a particular contract. – It does not affect the insured in any way.

– This type is usually satisfactory when reinsurance is of an unusual nature or when it is negotiated only occasionally.

• Formal facultative contract – An agreement whereby the reinsurer is bound to take certain types of risks involved if

offered by the ceding company • But the decision of whether to reinsure remains with the ceding company.

– Used when the ceding company is bound on certain types of risks by its agents before it has an opportunity to examine the applications.

Automatic Treaty

• Reinsurance may be provided whereby the ceding company is required to cede some certain amounts of business and the reinsurer is required to accept them. Such is described as automatic treaty.

• Two basic types of treaties have been recognized: – Pro-rata treaties

• Premiums and losses are shared in some proportion.

– Excess-of-loss treaties • Losses are paid by the reinsurer in excess of some predetermined deductible or

retention.

• No directly proportional relationship exists between their original premium and the amount of loss assumed by the reinsurer.

Why Insurance is Regulated?

Future Performance

• The management of other people’s money immediately becomes a candidate for

regulation.

– Insurance is a service paid for in advance but the benefits are reaped in the future; often

the beneficiary is entirely different and is not present when the contract is made to protect

his/her self-interest.

– The temptations exist for the unscrupulous to use these funds for their own ends instead of

for those to whom the funds belong

• particularly when it has grown to be one of the largest industries in the nation

Complexity

• The legal battles that have been fought over the interpretation of the contractual wording of a policy – offer testimony to the fact that misunderstandings arise over the meaning of provisions

even after the best legal minds have attempted to make the intent of the insurer clear.

– An insurer would find no difficulty in framing a contract that looked appealing on the surface

• but under which it would be possible for the insurer to avoid any payment at all.

Why Insurance is Regulated?

Unknown Future Costs

• The price the insurer must charge for service must be set far in advance of the actual performance of the service.

• To increase business, an insurer may consciously underestimate future costs in order to justify a lower premium and attract customers. – This may ultimately lead to the bankruptcy of the insurer.

• If the insurer refuses to accept business except at a very high premium – Those who pay may be overcharged and those who cannot pay will go without a vital

service.

Why Insurance is Regulated?

Violations of Public Trust

• These include – Failure by the insured to live up to the contract provisions

– Formulation of contracts that are misleading and seem to offer benefits they do not cover

– Refusal to pay legitimate claims

– Improper investment of policyholders’ funds

– False advertising

• Abuses in insurance have been such that major investigations of the insurance business have taken place. – However, it should be emphasized that most insurers

operate their business in an ethical fashion.

The Legal Background of Regulation

• Insurance has traditionally been regulated by the states

– Each state has an insurance department and an insurance commissioner

or superintendent.

• Before 1850, insurance was operated as a private business with

no more regulation than any other business sector.

• As a result of the early abuses of insurance, the need for

regulation became apparent.

The Legal Background of Regulation

• In 1868 an important U.S. Supreme Court decision, Paul v Virginia – Established the right of states to regulate insurance by holding that insurance was not

commerce • But was in the nature of a personal contract between two parties

• In 1871 an organization that was later named the National Association of Insurance Commissioners was formed – Through whose efforts a considerable measure of uniformity in regulation has been

achieved

• The South-Eastern Underwriters Association case overturned the Paul v. Virginia ruling – The court held that insurance was commerce and when conducted across state lines it

was interstate commerce • This made insurance subject to federal regulation

The McCarran-Ferguson Act

• The complete abandonment of state regulation of insurance in favor of federal regulation was not desired by either the insurance industry or state insurance commissioners

• The National Association of Insurance Commissioners propose what later became known as the McCarran-Ferguson Act, which became public law on March 9, 1945 and had these declarations: – It was the intent of Congress that state regulation of insurance should continue

• No state law relating to insurance should be affected by any federal law unless such law is directed specifically at the business of insurance.

– The Sherman Act, the Clayton Act, the Robinson-Patman Act, and the Federal Trade Commission Act would be fully applicable to insurance

• But only “to the extent that the individual states do not regulate insurance”

– That part of the Sherman Act relating to boycotts, coercion, and intimidation would remain fully applicable to insurance.

The McCarran-Ferguson Act

• Except to the extent indicated by the provisions of the

McCarran-Ferguson Act

– The insurance business continues to be regulated by the

states.

• The law does not exempt the insurance business from

federal regulation and provides for limited applicability of

certain federal laws to insurance.

The McCarran-Ferguson Act

• In summary

– Both states and the federal government are currently exercising

regulatory control over the insurance industry.

• States still have basic regulatory functions

– W hile the federal government exercises regulation in specified areas only

– The general trend seems to be for more federal control.

Responsibilities of the Insurance Regulators

• Can be classified into four primary categories

– Licensing and enforcement of minimum standards of financial

solvency

– Regulation of rates and expenses

– Agents’ activities

– Control over contractual provisions in insurance policies and

their effects on the consumer

Licensing and Financial Solvency

• The insurance commissioner enforces state’s laws regarding the

following:

– Admission of an insurer to do business

– Formation of new insurers

– Liquidation of insurers who become insolvent

• The commissioner must see that:

– Adequate reserves are maintained for each line insurance written

– The investments of the insurer are sound and within the state

requirements

Licensing and Financial Solvency

Minimum Capital

• Licenses are granted according to the type of insurance business to be conducted.

– Different capital standards are applied to each type.

• Minimum financial standards are set forth in each state and they vary considerably from state to state and by type of insurer.

– In the 1990s additional risk-based capital requirements were added beyond the flat dollar minimums.

– The minimum amount of capital an insurer must hold varies according to the insurer’s particular asset and liability portfolio.

• Those with riskier assets and those who write riskier lines of insurance are required to hold more capital.

Licensing and Financial Solvency

Investments • Insurers do not have complete freedom over how to invest

policyholder funds.

– Excessively risky investments may result in an insurer being unable to meet its obligations.

• All states impose investment limitations on insurers.

– The objective is to maintain safety and to give sufficient liquidity to enable insurers to pay all claims when due.

Liquidation

• The insurance commissioner is charged with the

responsibility of liquidating an insolvent insurer

– and must see that obligations are paid

– with an equitable treatment given to policyholders and other creditors.

Licensing and Financial Solvency

Security Deposits

• Most states require that each insurer make a deposit of

securities with the insurance commissioner.

– This is to guarantee that policyholders will be paid claims due

to them.

Regulation of Rates and Expenses

• The state insurance department is responsible for regulating the rates and expenses of insurance companies.

• If inadequate rates are charged

– Insolvency becomes a threat .

• If excessive or discriminatory rates are allowed

– The insurance department must handle public complaints.

Regulation of Rates and Expenses

Property-Liability Rates

• In all states, rates must meet three basic requirements: – The rate shall be reasonable.

– The rate shall be adequate to cover expected losses and expenses.

– The rate shall not be unfairly discriminatory among different insured groups.

• The typical rating law permits insurers to form rating bureaus – And to pool statistical information with these bureaus .

• In about 30 states, prior approval laws dictate that a rate must be filed with the insurance commissioner and approved before it can be used.

• The remaining states have open competition laws. – Rating bureaus can publish advisory rates only.

Regulation of Rates and Expenses

Life Insurance Rates

• Are essentially unregulated by states – Except indirectly through regulation of expenses and

reserves.

• Life insurance rates are affected by reserve and mortality assumptions set by the state. – Life insurance reserves represent an insurer’s obligation

to the policyholder for the savings element in the life insurance policy.

– Thus the effect of state regulation of reserves is to set a floor on life insurance

• So that insurers will not charge too little that it cannot meet its obligations to the policyholder.

Agents’ Activities

• For most consumers the agent is the only contact with the insurer. – It is vital that the agent be well trained and posses a requisite degree of

business responsibility.

• Failure of insurers to insist on higher standards is due to the fact that agents generally are paid on a commission basis. – The insurer assumes that because nothing is paid out unless the agent

produces business

• The easiest way to obtain more businesses to hire more agents.

• In such an atmosphere, the insurer is not likely to insist that its agents be exceptionally well trained.

• Most states require any insurance representative to be licensed – And to pass an examination covering insurance and the details of the

state’s insurance law.

Agents’ Activities

• Most state laws prohibit the following practices:

– Twisting

• Occurs when an agent persuades an insured to drop an existing insurance policy by

misrepresenting the facts for the purpose of obtaining an insured’s new business.

– Rebating

• Occurs when an agent agrees to return part of the commission to an insured as an

inducement to secure business.

– Misrepresentation

• An example would be making misleading statements about the cost of life insurance.

• An agent’s license can be revoked for these kinds of offences.

Regulation of Contract Provisions

• New policy forms must be approved in most states before they’re offered to the public.

• The purposes of such laws is to: – Ensure that the rates being used meet state requirements as to adequacy, non-

excessiveness, and fairness.

– Protect the public against deceptive, misleading, or unfair provisions.

– Approve the language in policies that is intended to make them more readable and understandable by the consuming public.

• A recent trend has been the deregulation of commercial lines contracts and rates. – The idea is that while individuals may need protection from certain unscrupulous insurers

• Large businesses have the knowledge and resources to be able to take care of themselves

– State regulators can then focus their efforts on personal lines, where consumer protection is likely to be more valuable.