Understanding the NAIC - Governance and Accountability
Five Questions That Explain the NAIC
Learn the fundamentals of the organization, from its purpose and governance to its authority and role in developing model laws.
What is The NAIC?
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through the NAIC, state insurance regulators collaborate on issues that affect consumers, insurers, and insurance markets across multiple jurisdictions. The organization supports that work by providing expertise, data, technology, training, research, and operational resources.
Why Does the NAIC Exist?
Insurance companies often operate in multiple states, while insurance regulation remains primarily a state responsibility. The NAIC provides a forum where state insurance regulators can coordinate their work, share expertise, develop common tools, and address issues that affect consumers and insurance markets across jurisdictions.
The NAIC helps states work together while preserving state authority.
Who Controls the NAIC?
State insurance regulators govern the NAIC. This includes establishing priorities, leading committees, voting on policy decisions, approving model laws and other work products, and electing NAIC officers. NAIC staff do not independently establish insurance regulatory policy and do not vote on policy matters.
What Authority Does the NAIC Have?
The NAIC helps state insurance regulators coordinate regulatory efforts, develop model laws and regulations, share expertise and best practices, collect and analyze regulatory information, conduct training and accreditation programs, and utilize technology and operational resources.
The NAIC itself does not regulate insurance companies, issue insurance licenses, or enforce state insurance laws. Those authorities remain with individual states and jurisdictions
Does the NAIC Make Laws?
No. State insurance regulators, as NAIC Members, develop model laws that states may choose to consider. An NAIC model law is not federal law and does not automatically become law in any state. Each state independently determines whether and how to adopt a model law through its own legal and regulatory processes.
Is the NAIC a Government Agency?
No. The NAIC is not a federal agency, and it is not a state agency. The NAIC is a nonprofit organization governed by state insurance regulators. Insurance regulatory authority remains with individual states and jurisdictions.
Inside the Organization
Learn how the NAIC is funded, governed, and held accountable to regulators, stakeholders, and the public.
Why Is the NAIC a Nonprofit Organization?
The NAIC was created to support cooperation among state insurance regulators and to provide services that help states carry out insurance regulation. As a nonprofit organization, the NAIC can provide shared resources, technology, data services, training, accreditation programs, research, and operational support to state insurance regulators nationwide.
The nonprofit structure allows the organization to support the work of state insurance regulators while being governed by those regulators.
How Transparent Is the NAIC?
Transparency is an important part of the NAIC’s work. Depending on the subject matter, transparency tools may include detailed website content, public meetings, meeting agendas, supporting materials, exposure drafts, public comment periods, meeting minutes, project histories, annual reports, budget information, and governance documents.
While some discussions may be limited when confidential supervisory information, company-specific information, legal matters, or other protected or state-owned information is involved, the vast majority of NAIC proceedings are subject to a highly transparent and public process
How Is the NAIC Funded?
The NAIC receives revenue from a variety of activities that support the state-based insurance regulatory system, including fees for certain products and services, technology and regulatory support services, publications and educational programs, meetings and events, and other activities Similar to other regulatory organizations, these fees help fund the technology, data infrastructure, and operational resources that states use to carry out insurance regulation on a coordinated basis.
The NAIC publishes budget and financial information to help provide transparency regarding its operations and resources.
Does the NAIC File an IRS Form 990?
An Internal Revenue Service declaration letter dated December 20, 1999, exempts the NAIC from the Federal Form 990 reporting requirements
How Is the NAIC Accountable?
The NAIC is accountable through governance by state insurance regulators, public committee meetings and materials, public comment opportunities, published budgets and financial information, annual reports, organizational bylaws, conflict-of-interest policies, and public documentation of committee work and adopted materials. These resources help stakeholders understand how the organization operates and how decisions are made.
The Accreditation Program
Learn how accreditation promotes consistent financial solvency oversight while preserving state regulatory authority.
The NAIC Financial Standards and Accreditation Program (Accreditation Program) helps state insurance regulators maintain strong and consistent financial solvency oversight. Accreditation is a certification given to a state insurance department once it has demonstrated it has met and continues to meet an assortment of legal, financial, organizational, and licensing standards as determined by a committee of its peers.
Accreditation, granted to those states in line with the Standards, fosters accountability and uniformity, and allows, but does not require, regulators of multi-state insurers to rely on the domiciliary state’s solvency regulation to avoid duplication of effort and expense. Each accredited state’s laws or regulations contain a provision that all licensed companies are to be examined periodically. In lieu of performing its own examination, a state may accept the examination report prepared by an insurance department that was accredited at the time of examination. Not only does the accreditation program help insurance regulators protect consumers by promoting baseline solvency standards, but this inter-state reliance ultimately saves insurance companies, and by extension consumers, millions of dollars in duplicative examination costs. Learn more about the Accreditation Program on NAIC.org.
No. States still may choose whether to pass a model or regulation. However, a state can only be NAIC accredited if it meets the baseline standards of the NAIC accreditation program.
Frequently Asked Questions
Get answers to common questions about governance, model laws, public input, and the state-based system of insurance regulation.
No. The NAIC develops model laws and other regulatory resources for states to consider. State legislatures and regulatory authorities decide what becomes law or regulation in each jurisdiction.
No. The NAIC is an organization of state insurance regulators.
No. NAIC staff support state-regulator-led work with research, policy analysis, legal and technical expertise, data, meeting coordination, and other resources. State regulators make policy decisions.
Much of the NAIC’s committee work is conducted through public meetings and calls, with agendas and materials made available online. The NAIC’s Policy Statement on Open Meetings explains when meetings are open and when some discussions may be closed for confidential supervisory, legal, or other protected information in the interest of supporting a secure and stable insurance marketplace.
Yes. Many projects include opportunities for written comments, public discussion, or stakeholder presentations. Model law drafts must receive at least one 30-day exposure period before a vote by the drafting group or parent committee.
State insurance regulators serving on the responsible groups vote on proposals. The required approval path depends on the type of work product. Model laws require a two-thirds vote of the parent committee and a two-thirds vote of the Executive Committee and Plenary. NAIC staff do not have a vote.
No. A model law is a proposed framework. Each state independently determines whether and how to adopt it.
A model law is developed when state regulators determine a minimum national standard or greater uniformity is needed and that the proposal meets the formal model-law criteria. A guideline is a regulatory best practice that states may use as appropriate, including as a basis for law, regulation, or bulletin.
Plenary is the full NAIC membership. It includes the chief insurance regulators from the states, the District of Columbia, and U.S. territories. Plenary acts on matters that need approval by the full membership, including many final model law votes.
Committees oversee major areas of insurance regulation. Task forces focus on specific issues. Working groups do detailed research, drafting, and review. Task forces and working groups operate under the umbrella of the appropriate committee. State insurance regulators lead these groups, and NAIC staff provide support.
Public comments help state insurance regulators factor in additional perspectives before they make decisions. Regulators review comments, discuss possible changes, and decide whether to revise a proposal.