What is the National Association of Insurance Commissioners (NAIC)?
The National Association of Insurance Commissioners (NAIC) is the regulatory body that oversees the insurance industry. The NAIC helps standardize insurance agencies as well as their practices and policies in the United States. The NAIC is not a government organization, insurance is regulated at the state level via the NAIC.
The NAIC was formed in 1871 and is based in Kansas City, Missouri. It was founded to help regulate insurance across multiple states as well as U.S. territories. The NAIC was set up after the Supreme Court decided that Congress cannot legislate or regulate the insurance industry.
The NAIC includes insurance commissioners from every state as well as the territories of Guam, American Samoa, Puerto Rico, the Virgin Islands, and the Northern Mariana Islands.
What exactly does the NAIC do?
The NAIC helps state insurance commissioners, and their staff provide information and services to the public regarding insurance. As insurance regulations can vary by state, the NAIC works with states and regions to coordinate those efforts.
A few duties of an insurance commissioner would include:
- Providing insurance related educational resources (websites, pamphlets, etc.) to the consumers in their state.
- Answer consumer and media questions about insurance products and policies in their state.
- Dealing with consumer complaints about the insurance industry.
- Regulating insurance companies, approving rate increases.
- Ensure that all insurers in the state are following the laws regarding insurance.
The NAIC assists commissioners by providing resources, research, and guidance on all issues related to insurance.
What is a NAIC code?
Most insurance cards have a NAIC code on them which consumers will use when filing a claim with your insurance company or a report with the local DMV. The NAIC code is unique to each insurance company, making them easy to identify. Large national insurance companies will usually have multiple NAIC codes as they operate in multiple states.
It is possible to search your insurance company by its NAIC number and look at complaints and consumer ratings for your insurance company. Click here to visit the consumer portion of the NAIC site. This can be helpful when shopping for a new insurance company.
Customer complaints and the NAIC
The NAIC puts all consumer complaints in their database and uses this data to generate a score for each insurance company that is based on the number and type of complaint it has received. The score reflects the percentage of customers that have made a complaint against that specific insurer. Look for companies with lower percentage rates when shopping for a new insurer.
Is the NAIC necessary?
The NAIC performs several important functions. Just a few are:
- Protect consumers: The NAIC helps consumers by regulating the insurance industry in their state, setting best practices and giving consumers the information they need to make decisions on insurance products.
- Educate consumers: The NAIC website has tons of detailed information about insurance companies as well as insurance products making it easy for consumers to research their insurance needs as well as insurance companies. Consumers can also ask questions and receive answers.
- Consolidate complaints: The NAIC gathers complaints from consumers and puts all that information into easy-to-read scores so you can quickly determine how an insurance company is reviewed by its customers.
- Professional education: The NAIC also offers professional education to state insurance regulators as well as industry professionals.