Insurance Regulation: The National Association of Insurance Commissioners' Accreditation Program Continues to Exhibit Fundamental Problems
Highlights
GAO discussed the National Association of Insurance Commissioners' (NAIC) efforts to improve and standardize insurance solvency regulation. GAO noted that: (1) states have attempted to improve the quality of insurance regulation by adopting the financial regulation standards set forth in the NAIC accreditation program; (2) NAIC and its review teams have interpreted the financial regulatory standards permissively and accredited states with weak regulatory authorities and practices; (3) many state insurance departments are still working to adopt the original financial standards and may not be able to keep pace with the evolving NAIC standards; (4) specific work procedures and guidelines for planning, supervising, and conducting examinations of insurance companies' financial conditions do not exist; (5) NAIC standards have encouraged some states to make improvements in insurance regulation; and (6) NAIC willingness to improve its accreditation process, will better its chances at achieving effective solvency regulation under the current state system.