Highlights:
Most Americans have no idea what the National Association of Insurance Commissioners (NAIC) is. Those who may be familiar with NAIC likely think of it as a trade association, or a quasi-governmental advisory body that helps state insurance departments share best practices.
That understanding may have been true a generation ago. But today, the NAIC is something entirely different. It is a Delaware-chartered corporation generating more than $160 million per year, acting as a standards-setter, accreditor, data monopolist, and unregistered lobbyist.
In June 2026, the U.S. Government Accountability Office (GAO) released a report investigating the NAIC’s unusual structure and opaque financial disclosures. The report confirmed what industry watchdogs have been warning for years – that the NAIC exercises massive regulatory power without the transparency required of either a government agency or a traditional non-profit.
It’s time for a reality check on what the NAIC is, what it was, and how it’s changed.
Transformation from Co-Op to Corporation
At its formation in 1871, the “Classic NAIC” was an unincorporated voluntary association. It was essentially a cooperative for state insurance regulators to harmonize rules across state lines. Critically, it had no enforcement power, no commercial revenue, and no lobbying apparatus.
That changed in the late 1990s. Following several years of reflection and study regarding its ambiguous status, the NAIC reorganized and officially became a Delaware corporation and reapplied for federal tax-exempt status.
Today this corporation acts as a quasi-national legislator, establishing standards that automatically become law in every state. It also functions as a quasi-national regulator, with its member regulators outsourcing functions to NAIC, which in turn collects tens of millions of dollars a year in revenues via fees that insurance commissioners require licensees to pay to use NAIC’s services.
NAIC Uses its Members to Provide it Guaranteed Revenue to Support its Infrastructure
So how does a non-profit “regulator,” with over 550 employees, more than all but four state departments of insurance, pull in $161.4 million in revenue in 2024? That year, 94% of that revenue came from mandatory fees paid by the same insurance companies that NAIC members purport to regulate, and from licensing and selling data access.
Freshly incorporated for the new millennium, the newly minted “NAIC-Newco” sought to systemically monetize its relationships with its regulator members by developing purportedly proprietary regulatory technology products and databases. Rather than simply advising states, the NAIC began competing with existing commercial vendors to generate revenues of tens of millions of dollars in mandatory filing fees. Because the NAIC is comprised of the very state commissioners who mandate the use of these systems, the corporation effectively uses public officials, and their coercive authority over licensees, as a captive sales force to require that licensees use its products – often with zero competitive bidding.
One of these mechanisms is the National Insurance Producer Registry (NIPR), of which NAIC is the only member and controls the board of directors. NAIC members require insurance agents and brokers to submit their licensing paperwork and fees through NIPR, and then NAIC extracts an annual licensing royalty of more than $30 million from NIPR in a questionable related party transaction. (Editor’s Note: We will explore the NAIC’s tech monopoly and no-bid contracting in a future Pinpoint piece).
The Coercive Accreditation Loop Makes NAIC a Quasi National Legislator
The NAIC has thus become a major commercial enterprise. It has also become, as a private corporation not subject to open meetings laws, a national policymaker for an industry with respect to which Congress has delegated most lawmaking authority to the States.
The critical mechanism is NAIC’s accreditation program. To maintain good standing with NAIC, state insurance departments must enact NAIC-drafted “model laws.” If a state legislature refuses to pass the NAIC’s preferred laws, the state can lose its accreditation, which is no minor inconvenience. The results are a severe disruption to its domestic insurance market, and higher costs for local businesses and consumers. The GAO noted that the NAIC’s accreditation reviews are kept secret, and findings are not made publicly available for review.
The circumvention of state lawmakers’ authority goes even further through a legislative tactic known as “incorporation by reference.” Rather than allowing lawmakers to debate and vote on regulatory standards, the NAIC packs policy choices into its handbooks and manuals which are incorporated by reference in the model laws that states must pass to gain accreditation. Hundreds of pages of these NAIC work products were written after the laws mandating them were passed but were applied by regulators as law automatically, triggering a substantial law review article asking if U.S. insurance regulation is unconstitutional.
The result is a troubling transfer of power: commissioners have ceded their authority to the NAIC and this has prevented lawmakers from conducting oversight of insurance regulations. Lawmakers have jurisdiction over their state commissioners, but they have no authority over the NAIC, which is not a public body. Elected officials should be dictating the rules of the road, not unelected bureaucrats, such as the employees of a private corporation.
The dynamic has become so unbalanced that states have been forced to push back to protect their own sovereignty. Michigan, for example, enacted legislation (MCL 500.478 and 500.479) explicitly barring the NAIC from compelling Michigan insurers to pay NAIC fees without direct authorization from the state’s insurance commissioner. To get that approval, Michigan law requires the NAIC to submit a detailed fiscal report, disclose executive compensation, and justify that its accreditation standards do not needlessly restrict “state sovereignty and innovation.” And the NAIC previously has backed off when its compliance with its reporting requirements was challenged.
The Accountability Gap
An organization with the power to set binding standards for a multi-trillion dollar industry, while operating a mandatory-fee data monopoly and exerting coercive control on sovereign state governments should be an open book. The NAIC is anything but.
As the GAO report documented, and Pinpoint has previously noted, the NAIC has not filed a Form 990 – the basic annual financial disclosure required of nearly all tax-exempt organizations – since 1955. Claiming an obscure exemption as a “wholly-owned instrumentality of the states,” a legal status the IRS reaffirmed during the 1999 Delaware reincorporation, the organization has shielded its finances from public view for seven decades. Executive compensation is not publicly disclosed, the conflict-of-interest policy does not cover key employees, it demands a fiduciary duty from its regulator members who sign vendor contracts with NAIC on behalf of their states to whom they also owe a fiduciary duty, and lobbying-related expenditures go entirely unreported. NAIC rejects credible arguments that it is subject to open meetings and records laws, and its non-binding open meetings policy exempts many if not most of the meetings where substantive discussions of public policy occur.
The NAIC presents itself as what it was in 1871 – a cooperative of state regulators serving the public interest. The changes over the last quarter century have produced something entirely different: a nine-figure corporation with coercive power over state governments, captive revenue from the industry it and its members regulate, and seven decades of financial secrecy.
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