GAO Report Finds Little Oversight For Insurance Group

Why It Matters

The National Association of Insurance Commissioners (NAIC) operates one of the nation's most consequential financial oversight systems with minimal public scrutiny. As the coordinating body for state insurance regulators across all 50 states and U.S. territories, the NAIC shapes how trillions of dollars in insurance assets are monitored and how consumer protections are enforced. Yet, the organization has operated largely outside the transparency requirements that govern comparable regulatory bodies, raising questions about accountability in a sector that touches nearly every American household, according to a Government Accountability Report.

The stakes are direct: NAIC sets standards for financial solvency monitoring, develops model insurance laws that states adopt, and maintains centralized data systems that regulators depend on to oversee insurance companies. When an insurer fails, state regulators use NAIC's infrastructure to manage claims and protect consumers. The organization's governance, finances, and conflict-of-interest policies, therefore, matter to anyone holding an insurance policy.

The Big Picture

The National Association of Insurance Commissioners was established in 1871 as a forum for state regulators to develop standards and coordinate oversight. Today, it operates through eight standing committees (labeled A through H), an executive committee, and staff offices in Washington, D.C., Kansas City, Missouri, and New York.

The organization's influence expanded significantly with its accreditation program, launched in 1990. This program standardizes financial solvency monitoring across states by requiring regulators to meet minimum competency standards. The program has proven durable: as of March 2026, state insurance regulators from all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands were accredited. Since 1990, only seven state insurance regulators have had their accreditation status suspended, and five of those were reaccredited within two years of suspension. Accreditation reviews occur every five years with full legal and on-site review, supplemented by annual interim self-evaluations.

NAIC also operates centralized data systems that help states carry out oversight and share information, and it provides a forum through committees, task forces, and working groups to develop standards through model laws. These functions have made NAIC essential infrastructure for state-level insurance regulation.

Transparency Gap

For 2026, NAIC's database filing fee cap is $108,817 for an individual company and $544,085 for a group. These fees are not trivial for smaller insurers and represent a direct cost passed through the insurance system. The financial dependency on industry fees creates a structural tension: the organization that sets standards for the industry also depends on that industry for its operating budget.

What makes NAIC's financial and operational structure unusual is its tax status. Since 1955, NAIC has been excepted from filing Form 990 with the IRS after the agency determined NAIC meets the criteria as a wholly-owned instrumentality of the states. The IRS reaffirmed NAIC's Form 990 filing exception in 1999 when NAIC reorganized, became a corporation, and reapplied for federal tax-exempt status.

This exception means NAIC avoids the annual public financial disclosures that most nonprofit organizations must file. The National Association of Attorneys General is classified similarly and is not required to file Form 990. But comparable organizations operate under different rules: the North American Securities Administrators Association, the Conference of State Bank Supervisors, and the Money Transmitter Regulators Association are all required to file Form 990.

GAO reviewed NAIC's publicly available documents and found they generally included governance and financial information comparable to Form 990, but the comparison stops there. NAIC's conflict-of-interest policy describes disclosure requirements for members, but not for key employees. NAIC's publicly available information did not include information related to fundraising and lobbying. The organization's whistleblower policy was not publicly available, and neither were its document retention and destruction policies.

The Scope of GAO's Investigation

The Government Accountability Office conducted this performance audit at the request of Rep. Jason Smith (R-MO-8), Chairman of the House Committee on Ways and Means. The report was published and publicly released on June 18, 2026.

Smith's interest in NAIC reflects broader congressional concern about the accountability of organizations that wield significant power over financial systems. The Ways and Means Committee has jurisdiction over tax policy and tax-exempt organizations, making NAIC's Form 990 exemption a natural subject for oversight. The timing reflects a wider reckoning in Congress about whether organizations claiming government instrumentality status should face the same transparency requirements as other nonprofits.

GAO's investigation was limited but systematic. The agency interviewed a nongeneralizable sample of five state insurance regulators from Illinois, Kentucky, North Dakota, Vermont, and Washington. GAO also interviewed six stakeholder groups representing insurance industry and consumer interests. The agency reviewed NAIC proceedings for meetings from 1952–1956 and 1999, examined NAIC's 1999 application for tax-exempt status, and reviewed IRS private letter rulings. GAO compared NAIC's publicly available information with nine parts of the IRS's 2024 Form 990.

The Bottom Line

NAIC's role extends beyond state coordination into federal oversight. The organization works with the Federal Insurance Office on terrorism risk insurance data collection, with the Federal Emergency Management Agency on flood insurance, with the U.S. Department of Health and Human Services on health insurance, and with the U.S. Department of Agriculture on crop insurance. NAIC designates a nonvoting state insurance regulator member to the Financial Stability Oversight Council, giving it a voice in federal financial stability discussions. NAIC and its members also participate in the International Association of Insurance Supervisors.

These partnerships underscore NAIC's centrality to the American insurance system. Yet the organization's governance and financial disclosures remain less transparent than those of comparable regulatory bodies, even as it coordinates oversight of an industry worth trillions in assets and serving hundreds of millions of consumers.

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