What is the main purpose of state insurance departments?

The main purpose of state insurance departments is to regulate the insurance industry and protect consumers. This regulatory function ensures that insurers operate fairly and in accordance with state laws, which are designed to safeguard the interests of policyholders. By overseeing the financial stability of insurance companies, monitoring their practices, and enforcing compliance with the law, state insurance departments help maintain a marketplace that is both competitive and transparent.

Additionally, these departments work to educate consumers about their rights and responsibilities regarding insurance products, ensuring that individuals can make informed decisions. They also handle consumer complaints and disputes, which further reinforces their role as advocates for policyholders.

While investigating fraudulent claims is an important aspect of maintaining industry integrity, it is just one of many functions carried out by insurance departments. Creating insurance policies, on the other hand, is typically the responsibility of the insurance companies themselves, not the regulatory bodies. Dictating premium rates is also not a universal responsibility of these departments, as rates are often influenced by market conditions, competition, and insurer individual assessments, rather than being directly set by state regulators.