State insurance regulators and the NAIC
Also known as: Department of insurance · Insurance commissioner · NAIC · McCarran-Ferguson Act
In the US, insurance is regulated by each state's insurance department, coordinated through the NAIC, under the McCarran-Ferguson Act's rule that insurance is subject to state law.
Legal basis
15 U.S.C. §1012 (McCarran-Ferguson Act)
The McCarran-Ferguson Act (1945) provides that the business of insurance is subject to the laws of the states, and that no federal law overrides state insurance regulation unless it specifically relates to insurance. Each state's insurance department licenses insurers and producers, reviews rates and policy forms, examines solvency and handles consumer complaints.
The NAIC — the National Association of Insurance Commissioners — is the standard-setting organization governed by the chief insurance regulators of the 50 states, the District of Columbia and five territories. It develops model laws that states adopt and coordinates the supervision of insurers operating in several states. At the federal level, Treasury's Federal Insurance Office monitors the industry but is not the primary regulator.
For an insurer or insurtech, this means fifty sets of rules on the same product: what may be used in rating, how claims must be handled, what anti-fraud programs are required. Tools used in underwriting and claims have to produce decisions that can be explained state by state.
Frequently asked questions
Who regulates insurance companies in the US?
Mainly the states. Each state's department of insurance licenses and supervises the insurers and agents operating there, under the McCarran-Ferguson Act. The NAIC coordinates the states, and the federal government plays a limited role.
How do I check if an insurer is licensed?
Use your state department of insurance's license lookup, or the NAIC's consumer insurance search, and confirm the company is licensed for that line of insurance in your state.