Functions of the Department of Insurance and Banking

The department of insurance and banking in your state is charged with making sure financial institutions with state charters, including banks and insurance companies, are financially sound.

State Banks vs National Banks

Most people have heard of the federal government agencies and sponsored enterprises that oversee or support the nation’s nationally chartered banks such as the Federal Reserve and the Federal Deposit Insurance Corporation. Fewer people, however, know that every state also has agencies that oversee and regulate those financial institutions within a state’s boundaries.

There are two kinds of banks - federal and state chartered. The department of banking for each state grants state banking charters and provides bank inspectors to verify that state chartered banks are meeting all criteria for sound financial operation.

The Role of the Insurance Department

Your state’s department of insurance plays an equally important role. There are no federally chartered insurance companies and no federal agencies charged with regulating them.

Each state has a state insurance department that must approve the creation and operation of an insurance company. Any insurance company chartered in another state also must receive permission from other states in which it wishes to operate. In cases of both the state department of insurance and banking, the state agencies inspect the financial institutions for soundness.

Additionally, a state department of insurance administers insurance licensing exams to individual insurance agents and maintains a database of complaints against agents and companies.

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Functions of the Department of Insurance and Banking

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