Insurance companies are entrusted with huge amounts of money -- in the $50 Billion to $200 Billion range in the case of the largest life insurance companies, such as the Prudential Insurance Company of America, Metropolitan Life Insurance Company and New York Life Insurance Company . The insurance business thus is "affected with the public interest" and regulated in an effort to ensure that the public and its funds are dealt with honestly, and to prevent the insurers from taking unwarranted risks with the money they are holding.

The primary purposes of insurance regulation historically have been (1) to maintain the insurers' financial solvency and soundness so they can carry out their long term obligations to policyholders and pay claims, and (2) to guarantee the fair treatment of current and prospective policyholders and beneficiaries by both insurers and the people who sell their policies.