What Is the National Association of Insurance Commissioners (NAIC)?
Let me explain what the National Association of Insurance Commissioners, or NAIC, really is. It's a nonprofit, nonpartisan organization that sets standards and establishes best practices for the insurance industry across the U.S. The NAIC supports insurance regulators and provides resources directly to you as a consumer. Founded back in 1871, it's led by the chief insurance regulators from 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.
Key Takeaways
You need to know that the NAIC sets the standards for the U.S. insurance industry. It provides support for insurance regulators and resources for consumers like you. The organization is led by the insurance commissioners of the 50 states, Washington, D.C., and five U.S. territories.
History of the National Association of Insurance Commissioners (NAIC)
The NAIC was founded in 1871 by state insurance regulators to coordinate regulation of multistate insurers. Their first major step was developing uniform financial reporting for insurance companies. Since insurers often operate in multiple states, there's been ongoing debate about whether regulation should be at the state or federal level. In 1944, the Supreme Court case United States v. The South-Eastern Underwriters Association ruled that insurance should be regulated by Congress under the Commerce Clause. But Congress overrode that the next year with the McCarran-Ferguson Act, exempting the industry from most federal regulation, including antitrust laws. Today, with few exceptions, regulatory authority remains with the states and their insurance commissioners.
Mission and Role of the NAIC
The NAIC is headquartered in Kansas City, Missouri, with executive offices in Washington, D.C. Its regulatory goals are straightforward: protect the public interest, promote competitive markets, facilitate fair and equitable treatment of insurance consumers, promote the reliability, solvency, and financial solidity of insurance institutions, and support and improve state regulation of insurance. Through committees, task forces, and working groups, the NAIC develops model laws and regulations to standardize insurance across states. Its standing committees cover areas like 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 meet three times a year, and 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 designation the following year.
Tip for Consumers
You should check the NAIC website, as it has a variety of resources you can use to learn about insurance products and review complaint data on specific companies.
The NAIC and Consumer Complaints
Beyond supporting state regulators, the NAIC offers tools for consumers like you. Its Consumer Insurance Search tool lets you research specific insurance companies, including any complaint data collected by the NAIC. Companies get scored on a national complaint index, which indicates if they've had more or fewer complaints than others, adjusted for market share. Based on the NAIC's most recent data from state insurance departments, most complaints in 2021 were about how insurers handled claims, with unsatisfactory settlements, delays, and denials making up over 50% of them. Other complaints, though fewer, involved high-pressure sales, misleading advertising, and discrimination. If you need to file a complaint, the NAIC website has a File a Complaint tool with links to state insurance departments for more details. The site also provides basic information on life, health, homeowners, automobile, and other types of insurance. There's even a Life Insurance Policy Locator tool you can use to check if a deceased relative left an unclaimed policy. Just remember, don't confuse the NAIC with similar acronyms like the National Association of Investors Corp. or the North American Industry Classification System.
