As a legal instrument necessarily embodying a host of legal details, the insurance contract is unavoidably technical and complex. Usually with respect to personal insurance and often with respect to commercial coverages, an inequality of understanding and bargaining power exists between the insurer and the insured. This imbalance in transactions which are fundamental to the security of millions of people invites regulatory oversight to adequately protect the insurance consuming public.

Insurance has become a vital element in the economic and social fabric of this nation. It impacts not only the private lives of individual persons, but it is essential to the functioning of the business community. While the prime focus of insurance regulation is protection of the policyholder, this too narrowly defines the need for regulation. Insurance is more than a private contract for service. It also fulfills essential public functions. In short, most of the American public are affected by insurance or the absence thereof in fundamental ways, the nature of insurance involves payments for future security provided in the form of a promise, and the imbalance of understanding and bargaining power between insurers and the insurance consuming public all afford publicly acceptable bases for ongoing regulatory scrutiny and, where appropriate, the exercise of regulatory controls.