With homeowners insurance premiums now eclipsing property taxes in two-thirds of U.S. counties—and inflation-adjusted costs up 45% over the past decade—the affordability crisis is squeezing American families. But the solution isn't to hand insurance regulation to Washington; it's to fix the National Association of Insurance Commissioners (NAIC), the nonprofit that coordinates state oversight.
The NAIC, founded in 1871, brings together regulators from all 50 states, D.C., and five territories to craft model laws, set solvency standards, and share data. It's a valuable mechanism for interstate cooperation, yet it operates with troubling opacity. An August Wall Street Journal column from the Southwest Public Policy Institute flagged its opaque accreditation process, limited financial disclosures, and heavy reliance on industry funding—the very industry it helps regulate.
The numbers are stark: the NAIC pulled in $161.4 million in revenue in 2024, with roughly 94% coming from industry-related sources. Despite its nonprofit status, it has been exempt from filing IRS Form 990 since 1955, meaning executive pay and other financial details stay hidden from public view.
The NAIC's structure stems from a 1944 Supreme Court ruling that applied federal antitrust law to insurance. Congress responded with the 1945 McCarran-Ferguson Act, returning primary regulation to the states. That tension—between centralizers and federalists—persists today. Some lawmakers, like Sen. Elizabeth Warren (D-Mass.), have questioned the NAIC's oversight of insurers and private-equity investments. Such scrutiny is fair, but it doesn't justify a federal takeover.
Insurance markets vary dramatically by region. Hurricanes, tornadoes, floods, earthquakes, and wildfires demand different products, pricing, and mitigation strategies. State regulators are closer to these local realities. A one-size-fits-all federal regime would likely struggle to accommodate such diversity, while state-based federalism allows tailored responses and mutual learning.
The NAIC's accreditation program reduces duplication by letting states rely on each other's exams. A Government Accountability Office review acknowledged these benefits but also pinpointed transparency gaps that need fixing.
Rather than federalizing, policymakers should adopt targeted reforms. Michigan offers a model: its insurance code requires the NAIC to annually disclose executive compensation, accreditation details, and public access to deliberations to state officials and legislative committees. Other states could follow suit.
Further steps include opening accreditation proceedings to public scrutiny, strengthening conflict-of-interest rules, adding legislative oversight of model standards, and ending the NAIC's Form 990 exemption. These changes would enhance accountability without expanding the federal bureaucracy.
Americans deserve affordable, reliable insurance and regulators who understand their communities. Reforming the NAIC can deliver both—without handing more power to Washington. As democratic accountability movements gain momentum, transparency in regulatory bodies becomes even more critical.
