The NAIC: what it does and why it matters

The National Association of Insurance Commissioners (NAIC) is the organization of the chief insurance regulators of the 50 states, the District of Columbia and five U.S. territories. It is not a government agency and it cannot make law. What it does is write model laws and regulations, set financial reporting and capital standards, accredit state solvency regulation, operate shared filing and licensing systems and publish the data that regulators and researchers rely on. For a business buyer, its fingerprints are on the financial strength of your insurer, the shape of your state's insurance code and many of the forms your broker files.

What the NAIC is

The NAIC describes itself as a standard-setting organization founded in 1871, governed by the insurance commissioners of its 56 member jurisdictions (50 states, D.C. and American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands), working through committees, task forces and working groups (NAIC, About). The commissioners are state officials, appointed or elected under their own state's law, who agreed long ago that an insurer writing in 40 states should not face 40 unrelated rulebooks. The NAIC is the table where they negotiate the common parts. It is headquartered in Kansas City, with additional offices in Washington, D.C. and New York.

Because the NAIC is a voluntary association, its output has no direct legal force. A model law becomes law only when a state legislature passes it, often with changes. A model regulation becomes binding when the state's insurance department adopts it under its own rulemaking authority. That is why you will see "adopted in 29 jurisdictions" rather than "the law" in NAIC reports. The NAIC's model bulletin on insurers' use of artificial intelligence, adopted December 2023, is a current example; see AI regulation in insurance: the NAIC bulletin and state rules for how unevenly it has been taken up.

What it actually produces

Model laws and regulations

Models cover nearly every part of the insurance code. A few that touch business buyers:

• Unfair claims settlement practices (Model 900 and the companion regulation, 902), which many states use as the base for their claim-handling rules.
• The Non-Admitted Insurance Model Act (Model 870), which sets surplus lines eligibility standards. A 2023 revision requires a $15 million minimum capital and surplus for eligible surplus lines insurers, and alien insurers must be on the NAIC Quarterly Listing of Alien Insurers (see surplus lines taxes, stamping fees and diligent search).
• The Managing General Agents Act (Model 225), which sets when an MGA needs a license and bond (Managing general agents (MGAs): what they are and what they mean for buyers).
• Producer compensation disclosure, in the Producer Licensing Model Act (Model 218) and state rules built on it (how commercial insurance brokers get paid).
• Credit for reinsurance and risk-based capital models, covered below.

Accreditation of state solvency oversight

The NAIC's Financial Regulation Standards and Accreditation Program is the quiet reason an insurer domiciled in one state is trusted in the other 49. The standards are grouped in four parts: laws and regulations (Part A), regulatory practices and procedures (Part B), organizational and personnel practices (Part C) and primary licensing, redomestications and change of control (Part D). A state earns accreditation by showing that its laws and practices meet them, and regulators in other states give weight to the examination work of an accredited state when they decide how much of their own work to do. Part A applies to a domestic insurer only when it qualifies as a multistate insurer, for example one licensed in a state other than its domicile, and captives are largely outside its scope (NAIC accreditation program pamphlet, January 2025). The list of accredited jurisdictions and review schedule are on the NAIC's Financial Regulation Standards and Accreditation (F) Committee page.

Financial reporting and capital standards

Insurers file annual and quarterly statutory statements in a format the NAIC prescribes, with accounting rules in its Accounting Practices and Procedures Manual. The statutory accounting basis is deliberately conservative and focused on solvency: it values what the insurer owns against what it owes right now, which is why you see statutory surplus rather than GAAP equity in a regulator's report. The NAIC also maintains the risk-based capital formulas. According to the NAIC, capital sufficiency is total adjusted capital divided by authorized control level RBC; at 300% or above no regulatory intervention is needed, between 200% and 300% a trend test applies, below 200% regulators can require action plans up to taking over management, and below 70% a regulator is obligated to take control (NAIC, Risk-Based Capital). More in risk-based capital: how regulators measure insurer strength.

Shared systems and data

• SERFF, the System for Electronic Rate and Form Filing, is the portal through which insurers submit rate and form filings to participating states and regulators review them (commercial rate filing: prior approval, file-and-use and deregulation).
• The NAIC's licensing and producer databases support multistate agent and broker licensing (producer licensing for agents and brokers).
• Market share and complaint data. The NAIC publishes market-share reports and a complaint index used in this site's insurer profiles; a complaint index above 1.00 means more complaints than the insurer's share of premium would predict.
• Financial data from statutory filings feeds the analytics regulators use to flag troubled insurers early.

How the NAIC affects you

You will rarely deal with the NAIC directly. Its work shows up in four places.

1. Solvency. The capital rules and the examination coordination sit behind an insurer's ability to pay claims, with guaranty fund backing for admitted carriers if it fails (what happens when an insurer fails: guaranty funds and business policies).
2. Your state's code. When a legislature adopts the NAIC's version of a statute, you get more uniform rules across state lines, which helps multistate employers and contractors.
3. Filings. Rate and form changes your broker explains at renewal often passed through SERFF.
4. Complaints. A complaint to your department feeds data the NAIC aggregates, which is how patterns of bad claim handling become visible (how to complain to your state insurance department).

What the NAIC does not do

• It does not license insurers or agents; states do (state insurance departments and what they can do for businesses).
• It does not approve rates, forms or mergers.
• It does not rate insurers. Financial strength ratings come from private agencies such as AM Best (AM Best ratings explained for business buyers), and the NAIC's own RBC ratio is, by its own description, a regulatory minimum and not intended for ranking insurers.
• It does not resolve your claim dispute.
• It is not a federal body; the federal government's insurance presence is the Treasury's The Federal Insurance Office and federal reach.

A practical example

Say a New York restaurant group asks its broker why its surplus lines excess policy shows a different stamping fee than its Texas location's policy. The NAIC did not set either; New York's excess line association and Texas's stamping office set their own fees under state law. What the NAIC contributed is the common eligibility framework that lets both insurers write in either state. The New York and Texas state guides show the specifics.

Key takeaways

• The NAIC is an association of the state insurance regulators of 56 jurisdictions, founded in 1871; it has no power to make binding law.
• Its models matter only when a state adopts them, so always check your own state's version.
• Accreditation, statutory accounting and risk-based capital are the NAIC's main contributions to insurer solvency.
• SERFF and shared data systems explain much of how filings and complaints are handled across states.
• The NAIC does not rate insurers, approve rates or settle claims; your state department and a private rating agency do the work buyers care about.