Casualty insurance is a problematically defined term which broadly encompasses insurance not directly concerned with life insurance, health insurance, or property insurance.
Casualty insurance is mainly liability coverage of an individual or organization for negligent acts or omissions. However, the term has also been used for property insurance, aviation insurance, boiler and machinery insurance, and glass and crime insurance. It may include marine insurance for shipwrecks or losses at sea, fidelity and surety insurance, earthquake insurance, political risk insurance, terrorism insurance, fidelity and surety bonds.
One of the most common kinds of casualty insurance today is automobile insurance. In its most basic form, automobile insurance provides liability coverage in the event that a driver is found "at fault" in an accident. This can cover medical expenses of individuals involved in the accident as well as restitution or repair of damaged property, all of which would fall into the realm of casualty insurance coverage.
If coverage were extended to cover damage to one's own vehicle, or against theft, the policy would no longer be exclusively a casualty insurance policy.
Definitions
The state of Illinois includes vehicle, liability, worker's compensation, glass, livestock, legal expenses, and miscellaneous insurance under its class of casualty insurance.
In 1956, in the preface to the fourth edition of Casualty Insurance Clarence A. Kulp wrote:
Broadly speaking, it may be defined as a list of individual insurances, usually written in a separate policy, in three broad categories: third party or liability, disability or accident, and health, material damage. One of the results of comprehensive policy-writing .... is to raise the question of the usefulness of the traditional concept of casualty insurance ... some insurance men predict that the casualty insurance of the future will include liability and disability lines only.
Later in Chapter 2 the book states that insurance was traditionally classified under life, fire-marine, and casualty. Since multiple-line policies began to be written (insurance contracts covering several types of risks), the last two began to merge.
When the NAIC approved multiple underwriting in 1946, casualty insurance was defined as a blanket term for the legal liability except for marine, disability and medical care, and some damage to physical property.
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories.
Mission and function
Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. The NAIC is an Internal Revenue Code Section 501(c) non-profit organization. The 2019 NAIC president is Eric A. Cioppa, who is also the superintendent of the Maine Bureau of Insurance.
The NAIC acts as a forum for the creation of model laws and regulations. Each state decides whether to pass each NAIC model law or regulation, and each state may make changes in the enactment process, but the models are widely, albeit somewhat irregularly, adopted. The NAIC also acts at the national level to advance laws and policies supported by state insurance regulators. The NAIC also is responsible for creating the statutory accounting principles (SAP) upon which insurance accounting is based. SAP is often contrasted with Generally Accepted Accounting Principles (GAAP) and is notable for its very conservative valuation methods. Additionally, the NAIC promulgates the NAIC annual statement which incorporates SAP and must be filed with the department of insurance in every state in which an insurance company writes business.
The NAIC is not a regulator; while its members are the insurance commissioners (i.e., the chief insurance regulators) of each U.S. state and six territories, the NAIC is a non-governmental organization that concerns itself with insurance regulatory matters but does not actually regulate. The states have not delegated their regulatory authority to the NAIC.
Although the NAIC's mandate is to benefit state regulators and insurance consumers by promoting uniform laws and regulations, by promoting uniformity of regulation among the states, it also makes it easier for insurance companies to comply with the laws and regulations in all states in which they do business.
National meetings and publications
The NAIC holds three national meetings a year, in the spring, summer, and fall throughout the United States. Members of state insurance departments, NAIC staff, and insurance industry representatives gather to learn about new, upcoming NAIC initiatives on emerging topics in the field of insurance regulation. During the meeting, committees, task forces, and working groups gather to discuss and review drafts of new and revised model laws, guidelines, and white papers. All amendments and committee actions are recorded in a memorandum and made available on the NAIC website.
Following every national meeting, the official Proceedings of the NAIC is published. The Proceedings serve as the permanent record of all NAIC actions, including model laws and regulations, as well as committee and task force minutes and reports. The current and some archival issues of the Proceedings are publicly available for download in PDF format on the NAIC Publications department website.
History
After Paul v. Virginia, state insurance commissioners formed the National Insurance Convention in 1871 to coordinate; this became the National Convention of Insurance Commissioners and then the National Association of Insurance Commissioners. During the first session, a uniform annual statement was adopted and life insurance companies but not fire insurance companies were required to make reserve deposits to protect their policyholders. In the second session a model law was passed; many states adopted a standard fire insurance policy known as the New York Standard Fire Policy of 1886. It has been argued that the policy was designed to favor the industry, as it contains various conditions which, if not adhered to, render the policy void.
Organization structure and officers
National Association of Insurance Commissioners was incorporated in Delaware on October 6, 1999. NAIC's central office is in Kansas City, Missouri in the Town Pavilion, its executive offices are in Washington, D.C., and the Capital Markets & Investment Analysis Office is in New York City.
Officers of NAIC include a president, president-elect, vice president, and secretary-treasurer, who are elected annually by the membership by secret ballot. To help organize NAIC's efforts, the United States has been divided into four geographic zones: Northeastern, Southeastern, Midwestern and Western; each zone has its own chair, vice chair and secretary who sit on the NAIC's executive committee. NAIC also maintains additional standing committees to address specific charges as approved by NAIC leadership.
