What Is the National Association of Insurance Commissioners (NAIC)?
The National Association of Insurance Commissioners (NAIC) is a nonprofit, nonpartisan organization governed by the chief insurance regulators of the 50 states, the District of Columbia, and the five U.S. territories: American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands. The NAIC sets standards and establishes best practices for the U.S. insurance industry and provides support to insurance regulators. It also provides information and resources to consumers. Insurance products sold in the U.S. are largely regulated by the states, rather than the federal government.
- Insurance in the United States is regulated primarily by the individual states, rather than by the federal government.
- The National Association of Insurance Commissioners (NAIC) is led by the insurance commissioners of the 50 states, plus Washington, D.C., and five U.S. territories.
- The NAIC develops model rules and regulations for insurance companies and products.
- The association also offers programs, information, and online tools for insurance consumers.
History of the National Association of Insurance Commissioners
The NAIC was founded in 1871 by state insurance regulators to "address the need to coordinate regulation of multistate insurers. The first major step in that process was the development of uniform financial reporting by insurance companies."
Because insurers often do business in multiple states, the question of whether they should be regulated on a state or federal level has long been a matter of debate in the U.S. The 1944 Supreme Court case United States v. The South-Eastern Underwriters Association determined that the insurance industry should be subject to regulation by Congress under the Commerce Clause of the Constitution, which gives lawmakers regulatory authority over interstate and international commerce. However, Congress effectively overrode that ruling the following year with the passage of the McCarran-Ferguson Act, which exempted the insurance industry from most federal regulation, including antitrust laws.
Today, with few exceptions, that regulatory authority still resides with the states and their elected or appointed insurance commissioners.
How the National Association of Insurance Commissioners Works
The NAIC is headquartered in Kansas City, Mo., with executive offices in Washington, D.C. The group says its regulatory goals are to:
- Protect the public interest
- Promote competitive markets
- Facilitate the fair and equitable treatment of insurance consumers
- Promote the reliability, solvency, and financial solidity of insurance institutions
- Support and improve state regulation of insurance
Through committees, task forces, and working groups, the NAIC develops model laws and regulations to help standardize insurance across the states. Its standing committees include life insurance and annuities, health insurance and managed care, property and casualty insurance, market regulation and consumer affairs, the financial condition of insurers, financial regulation standards and accreditation, and international insurance relations.
The NAIC and its committees normally meet three times a year. These meetings are generally open to the public.
The NAIC also offers education and training courses for insurance regulators. In 2006, it launched the Insurance Regulator Professional Designation Program and awarded its first professional designation the following year.
The NAIC website has a variety of resources consumers can use to learn about insurance products and check out complaint data on specific companies.
The NAIC and Consumer Complaints
In addition to its work in support of state insurance regulators, the NAIC offers a number of tools for consumers. Its Consumer Insurance Search tool helps consumers research specific insurance companies, including any complaint data the NAIC has collected. Companies are scored on a national complaint index, which shows whether they've received more or fewer complaints than other insurers, after adjusting for market share.
According to the NAIC's most recent aggregated data from state insurance departments, the majority of complaints in 2019 involved how an insurer handled policyholders' claims, with unsatisfactory settlements or offers, delayed claims, and denied claims collectively accounting for just over 50% of all complaints. Other types of complaints, though much lower on the list in terms of percentages, included high-pressure sales tactics, misleading advertising, and discrimination.
For consumers who would like to register a complaint of their own, the NAIC website also has a File a Complaint tool, with links to state insurance departments for further information on the process.
Along with those consumer resources, the NAIC website offers basic information on life, health, homeowners, automobile, and several other types of insurance. It also has a Life Insurance Policy Locator tool, which consumers can use to request information on whether a deceased relative left behind an unclaimed policy.