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Five Departments of Insurance Achieve Accreditation for Meeting Financial Solvency Oversight Standards
During the National Association of Insurance Commissioners (NAIC) Summer National Meeting, The NAIC Financial Regulation Standards and Accreditation (F) Committee awarded accreditation to the departments of insurance for Arkansas, District of Columbia, Indiana, Michigan, and New Jersey. Accredited insurance departments undergo comprehensive, independent review every five years to ensure they meet financial solvency oversight standards.
The NAIC Accreditation Program was established to develop and maintain standards to promote effective insurance company financial solvency regulation. The purpose of the accreditation program is for state insurance departments to meet baseline standards of solvency regulation, particularly with respect to regulation of multi-state insurers. NAIC accreditation allows non-domestic states to rely on the accredited domestic regulator to fulfill a baseline level of effective financial regulatory oversight. This creates substantial efficiencies for insurance regulators, who are then able to coordinate and rely on each other's work. It also creates far greater efficiencies for insurance companies licensed in accredited states, which are then not subject to financial examinations or other financial oversight by multiple jurisdictions. All fifty states, the District of Columbia, and the U.S. Virgin Islands are currently accredited.
To become accredited, the state or territory must submit to a full on-site accreditation review. During this review, the team of independent consultants reviews the department's compliance with the standards to develop a recommendation regarding the state's accredited status.
- The Accreditation Program allows for inter-state cooperation, reduces regulatory redundancies, and provides baseline consumer protections.
- The standards used in the accreditation process are carefully considered and are developed in an open and transparent NAIC multi-layered committee process. Regulators receive input from numerous interested parties including state legislators, consumer representatives and industry representatives.
- Significant negative consequences stem from the loss of accreditation, including potential loss of domiciled insurers and negative implications for the professional reputation of the state insurance department.
- The high quality and high degree of consistency attributable to the Accreditation Program is a key defense against federal encroachment in state-based insurance regulation.