WSJ Opinion: How Did A Nonprofit Become America’s Insurance Regulator?

This weekend, The Wall Street Journal opinion page ran an op-ed from the Southwest Public Policy Institute’s Patrick Brenner highlighting a problem Pinpoint has been tracking for years: the National Association of Insurance Commissioners, a private nonprofit which has quietly absorbed the regulatory authority of all 50 states over a $3 trillion insurance market — with no Form 990, no public accreditation findings, and no accountability to voters:

“Welcome to the National Association of Insurance Commissioners. The first rule of the organization is you don’t talk about the organization. The Government Accountability Office reported in June that the NAIC committee responsible for accrediting state insurance regulators doesn’t make its accreditation findings public and that its discussions on the subject are limited to regulators. Accreditation determines whether other states will accept a state’s solvency examinations and, in practice, places intense pressure on legislatures to enact specified model laws. The deliberations happen in a room a state resident can’t enter and produce a record he can’t read.” – Patrick Brenner, Southwest Public Policy Institute

Op-Ed: Patrick Brenner: How Did A Nonprofit Become America’s Insurance Regulator?

States have surrendered much of their power to a private organization with almost no transparency.

By Patrick Brenner

Wall Street Journal

August 28, 2026

New Mexico’s Insurance Superintendent Alice Kane recently told state lawmakers that insurers declined to renew more than 6,200 homeowner policies in 2025, the highest number ever. The reflex is to blame greedy insurers and actuaries in Hartford, Conn., pricing wildfire risk in counties they couldn’t find on a map.

The nonrenewal crisis got New Mexicans to look closely at their insurance market for the first time in years. That market, it turns out, is strange. Many rules governing it weren’t written in Santa Fe, or in Hartford, or by anyone accountable to voters. They were written in Kansas City, Mo., by a private nonprofit.

Americans paid more than $3 trillion in premiums in 2025 for property and casualty, title, life, accident and health insurance. In most cases, insurers don’t answer to federal regulators, because Congress largely leaves insurance to the states. The states built a kind of clearinghouse to determine standard formulas such as how much capital an insurer must hold against every asset on its books. All 50 states participate in the same arrangement.

Welcome to the National Association of Insurance Commissioners. The first rule of the organization is you don’t talk about the organization. The Government Accountability Office reported in June that the NAIC committee responsible for accrediting state insurance regulators doesn’t make its accreditation findings public and that its discussions on the subject are limited to regulators. Accreditation determines whether other states will accept a state’s solvency examinations and, in practice, places intense pressure on legislatures to enact specified model laws. The deliberations happen in a room a state resident can’t enter and produce a record he can’t read.

New Mexico’s insurance code governs how insurance holding companies register with the state. It requires every covered insurer to file “a registration statement on a form and in a format prescribed by the national association of insurance commissioners.” Until 2014, the statute called for the form “provided by the superintendent,” who is accountable to New Mexico’s governor. Lawmakers struck those words and replaced them with the private association.

New Mexico’s policy-form filings must use transmittal documents matching “the appropriate current” NAIC uniform documents, according to the New Mexico Administrative Code. Rather than point state regulators to a fixed edition of the forms, the rule directs them to the NAIC’s dynamic website. Insurers backing reinsurance trusts must report whatever the NAIC annual statement form requires.

Lawyers call this dynamic incorporation by reference. When a statute adopts an outside body’s manual as that manual currently stands, the next revision can alter binding obligations under the law without a vote, a hearing, a committee substitute or a governor’s signature. The GAO report describes the machinery without naming it: Accreditation requires states to enact NAIC model laws, and those model laws in turn require regulators to follow NAIC standards.

This arrangement effectively means that an unelected body holds control over states. Daniel Schwarcz of the University of Minnesota Law School argued in a 2018 paper published in the Connecticut Insurance Law Journal that the arrangement violates nondelegation principles in every state constitution. He made this case again in the Hill alongside R.J. Lehmann of the free-market R Street Institute.

The GAO report eight years later made no recommendations and found no wrongdoing. It concluded that the governance and financial information in NAIC’s public documents is generally comparable to what an IRS Form 990 collects. NAIC publishes its bylaws and audited financial statements. State regulators told the GAO that accreditation saves money by letting them rely on one another’s examinations.

While the GAO report didn’t find wrongdoing, the facts it documented are troubling. NAIC has been exempt from filing Form 990 since 1955, on a determination that the organization is “a wholly-owned instrumentality of the states.” In 2024 it reported $161.4 million in revenue, roughly 94% of which comes from the industry whose standards it writes. Its 2026 filing fees are capped at $108,817 for a single company and $544,085 for a group. NAIC doesn’t disclose what it pays its executives. Its published conflict-of-interest policy covers member commissioners but not, so far as the GAO could determine, its chief executive. An employee handbook includes a conflict-of-interest policy, but it isn’t publicly available.

NAIC is designated a 501(c)(3) charitable organization. If NAIC takes the benefits of tax-exempt status, it should be required to file a 990 like other nonprofits. The GAO noted that the Conference of State Bank Supervisors and the North American Securities Administrators Association are required to file Form 990. Both sit beside NAIC on the Financial Stability Oversight Council.

While Washington could remedy the situation—such as by stripping NAIC of its tax-exempt status—waiting for Congress to act is like waiting to win the lottery. In the meantime, states can push for accountability. Since 1998, Michigan has required NAIC to file an annual report with the state’s insurance regulator and both legislative insurance committees. This report must include what NAIC pays its officers, every standard a state must adopt to maintain accreditation and whether its deliberations are open to the public.

Fifty states delegated their rule-making to an organization they supposedly own. But somewhere along the way, the organization they owned began owning them. One state thought to ask more. New Mexico’s legislators are already asking why 6,200 homeowners lost their coverage. Like Michigan, they should demand more of the rule makers governing the market. Which state will be the second to do so?

Mr. Brenner is president of the Southwest Public Policy Institute.

https://www.wsj.com/opinion/how-did-a-nonprofit-become-americas-insurance-regulator-f3da377e