Historically, almost completely the individual state governments have regulated the insurance industry. In 1869, the United States Supreme Court cemented state-based insurance regulation as the law of the land when it ruled in Paul v. Virginia that the issuance of a policy of insurance was not the transaction of commerce, and therefore beyond the scope of federal legislation. Back then, the state regulatory system has been described as cumbersome, redundant, confusing and costly. Approximately after 70 years from 1869, the Supreme Court overturned that decision that insurance was subject to certain federal legislation such as the federal antitrust statute. But then the congress responded immediately with McCarran-Ferguson Act. The McCarran-Ferguson Act specifically provides that the regulation of the business of insurance by the state governments is in the public’s best interest. On top of that, the Act states that no federal law should be taken to invalidate, harm or supersede any law enacted by any state government for the purpose of regulating the business of insurance, except the federal law specifically relates to the business of insurance. Even though the state was the main regulator, but federal regulatory influence has always been expanding. The most well known influence was supposed to be dual state legislation, where it happened when a wave of insurance companies insolvencies. But then NAIC (National Association Of Insurance Commissionaire) ruined it by reforming several state insurance regulation.
The NAIC basically function as a vehicle for individual state regulators to coordinate their activities and share resources. NAIC was established in 1871, where it functions as an advisory body and service provider for state insurance departments. Commissioners use the NAIC to pool scarce resources; usually they discuss issues of common concern and to align their oversight of the industry. Actions to be taken are usually determined by the individual states.
Nebraska Department of Insurance (NDOI) is basically an insurance regulating department to protect policyholders from getting cheated. NDOI also ensures the insurance marketplace serves the public interest through the effective regulation. By collaborating with the National Association of Insurance Commissioners (NAIC) they both (NDOI and NAIC) have come up with best practices, peer reviews, and also has successfully establish national standards as a bench mark for all the insurance company to not go overboard beyond the limitation. Nebraska Department of Insurance also does participate in International affairs, where they are apart of International Association of Insurance Supervisor (IAIS). In the association they usually work together with fellow regulators around the world to ensure they supervise identify systematic risk in the insurance sector, consulting and supervise cross border insurers and establishing best practices internationally.