It would seem as the car insurance operates on its own, there is no one keeping the market under control. Well, you are wrong because the Government does have an important role. They do have authority in deciding how these company\u2019s work and make a profit. Let us explain in following! Their Role It may seem the government doesn\u2019t have a say in auto insurance, but they do. Yes, we keep hearing it from time to time. There are many cases where we hear the Government introduced new legislation to keep the insurance companies in order and keep them from ripping off the customers. \u00a0The insurance commissioner has control over the industry. Therefore, they keep a check and make sure the rates are affordable for the customer base. If any company fails to keep up, they must issue refunds to customers or pay fine to the legislation. Why is the Insurance Market Regulated? Regulating the industry is important. It helps protect the consumer from unfair price increases and ensure the insurance companies remain financially solvent, so they pay for claims as they arise. The Government Regulation, both federal and state makes sure the cars are safe to use, food is safe to consume, and banks are protected. Federal Government Doesn\u2019t Regulate Car Insurance The US Constitution doesn\u2019t allow federal agencies to regulate the insurance industry.\u00a0 Some agencies have the right to gather data, and information from insurance companies and advise state regulators on what they came across with. These agencies are responsible for providing oversight. But they don\u2019t have any authority to regulate the insurance laws. This begs the question if the federal agencies or government isn't keeping the companies in check, then who does? State Authorities The answer to that question is State Authorities. The regulation of auto insurance companies and rate are determined state by state. State insurance departments have a Division of Insurance which sets the minimum coverage level that drives legally in the state. It decides how insurance companies will assess risk and determine its pricing. Insurance regulation and required coverage are specific to each state based on legislator\u2019s best understanding of the needs of the constituency. For instance. Some states don\u2019t allow to operate and use credit as a deciding factor. These states also weight add-on and side offers lick glass deductible a full coverage.\u00a0 They do it because glass damage by sands and rocks is very common in those areas. Who Oversees the Whole Deal? That will be insurance commissioners. Car insurance is regulated by the state, but with the help of an insurance commissioner that appointed by the governor, and voted into office at the state-specific interval, they take charge monitoring insurance companies to comply with state laws. The insurance company is operating outside of its legal obligation state; it is up to the insurance department to intervene. This helps to assess penalties, fines, and refunds to customers when rates are charged improperly. Insurance companies change the legislation passed from the state; It also takes care of what companies are allowed to use rating factors to evaluate pricing including credit, education and home ownership. What Affects Your Insurance Premium? Given the fact that Insurance companies comply with respective state regulations, then they calculate what they are going to charge their customers for individual premiums using rating algorithms. See here for the top 15 factors affecting car insurance rates. They have a business to run, and they pay taxes, wages, and other expenses to stay afloat. They need to turn a profit if they want to survive in the competitive market. So, it translates that the consumer doesn\u2019t see how insurance company calculate rates but state departments do.