A Corrective Order is an official directive issued by a state’s insurance commissioner directed towards an insurance company. This order is typically issued when an insurance company violates regulations or fails to meet certain standards and practices required by state insurance laws.
Purpose
The main purpose of issuing a corrective order is to correct practices that may be harmful to policyholders or are in violation of statutory regulations. This enforcement tool helps to ensure that insurance operations adhere to legal and ethical guidelines, ensuring the protection of policy holders and the integrity of the insurance market.
Application
When a state insurance department identifies non-compliance or problematic issues during audits or investigations, the insurance commissioner has the authority to issue a corrective action. These orders require the insurer to make necessary changes to comply with legal and regulatory standards.
Enforcement
Failure to comply with a corrective order can lead to further actions, such as fines, restrictions, or loss of license to operate, depending on the severity of the non-compliance and the specific state regulations.
External Resources
Example Act or Regulation Related:
- Various State Insurance Codes (e.g., California Insurance Code Section 1011.2 concerning corrective orders)
