Executive Summary
In June 2026, the U.S. Government Accountability Office released National Association of Insurance Commissioners: Role with State Insurance Regulators and IRS Reporting Requirements (GAO-26-107956), prepared at the request of House Ways and Means Chairman Jason Smith. The report is descriptive rather than evaluative. It makes no recommendations and finds no wrongdoing.
It nonetheless documents a structural condition that should concern any state whose insurance market is under strain: an organization that shapes solvency standards in all fifty states, controls the accreditation status of state regulators, and collects roughly 94 percent of its revenue from the industry those standards govern, while disclosing less about its own governance than a small charitable nonprofit is required to disclose.
The Pinpoint Policy Institute reached this conclusion in its July 25, 2026 analysis, arguing that the National Association of Insurance Commissioners has positioned itself as governmental enough to avoid federal disclosure while remaining private enough to avoid public accountability. The Southwest Public Policy Institute agrees with that assessment and adds a dimension Pinpoint’s national framing leaves open: the most immediately available remedy is not federal. It is legislative; it already exists in statute in one state, and legislatures can enact it without waiting for Congress or the Internal Revenue Service.
Why This Matters
Homeowners across the country are absorbing rate increases and coverage withdrawals driven by wildfire exposure, drought-related structural risk, and reinsurance repricing. Rural and lower-income households in the region carry these costs disproportionately, and they have the fewest alternatives when a carrier exits a market.
The GAO report explains why NAIC governance is not a distant Washington concern for these households. State regulators seeking accreditation must have enacted NAIC model laws, or substantially similar provisions, into state law, and must follow NAIC accounting manuals, valuation standards, examiner handbooks, and financial reporting formats (GAO-26-107956, pp. 9–10). Insurers pay fees to file financial statements with NAIC, and those filing requirements are themselves embedded in state law as a condition of accreditation (p. 13). NAIC also assigns investment risk designations that regulators use to evaluate whether carriers can pay claims (p. 13).
Every one of those mechanisms terminates in a premium a family pays, or a policy a family cannot obtain. When the standards behind those outcomes are set through processes the public cannot observe, the accountability chain that is supposed to run from the ratepayer to the commissioner to the legislature is interrupted.
What the GAO Documented
Finding 1: An eighty-year-old filing exception, reaffirmed once, never revisited.
NAIC has been excepted from filing Form 990 since 1955, after the IRS determined it was an instrumentality wholly owned by the states. The IRS reaffirmed the exception in 1999, when NAIC reorganized as a corporation and reapplied for tax-exempt status and the filing exception (GAO-26-107956, pp. 16–17). The determination rested on findings that NAIC performs a governmental function on behalf of the states, under criteria set out in Revenue Ruling 57-128 and Rev. Proc. 95-48.
The relevant question is whether that determination has been tested against what NAIC has become. In 1955, NAIC was a forum for commissioners to compare notes. In 2024, it reported $161.4 million in revenue and $275.9 million in assets (p. 24), operated offices in three cities, ran a national accreditation program with suspension authority, and sold regulatory data to commercial vendors, researchers, and academics (p. 13). No IRS determination since 1999 has evaluated whether the instrumentality rationale still fits that institution.
Finding 2: Comparable organizations are split, and NAIC sits on the less transparent side.
GAO identified four illustrative organizations with similar membership structures and coordinating roles. Three — the Conference of State Bank Supervisors, the North American Securities Administrators Association, and the Money Transmitter Regulators Association — are required to file Form 990. One, the National Association of Attorneys General, is not (p. 17).
Candor requires acknowledging the fourth case. NAIC’s exception is not unique, and GAO notes that 109 of the 362 organizations sharing NAIC’s tax classification are not required to file (p. 17, n. 41). But the two closest institutional analogues to NAIC — the state banking and state securities regulator associations that, like NAIC, designate nonvoting members to the Financial Stability Oversight Council (p. 18) — both file. Among peer bodies performing genuinely parallel functions, NAIC is the outlier.
Finding 3: Executive compensation is disclosed to Michigan and to no one else.
Form 990 requires disclosure of compensation for key employees, including the chief executive officer. GAO found NAIC does not make this public, and NAIC staff confirmed it (p. 19). NAIC reports aggregate employee salaries in its financial statements and budgets, and provides confidential key-employee compensation to certain state and federal agencies. One state receives it as a matter of law: under Mich. Comp. Laws § 500.478, NAIC must submit an annual report including that information to the Michigan insurance regulator and legislature (p. 19).
This is the single most actionable fact in the report. A disclosure obligation that Michigan’s legislature imposed by statute is available to every other state legislature on identical terms.
Finding 4: Governance policies exist but are not public.
NAIC’s public conflict-of-interest policy addresses disclosure requirements for members. GAO could not locate public requirements covering key employees such as the chief executive officer. NAIC staff described an employee handbook containing a conflict-of-interest policy covering gifts, contract awards, and insider trading, along with provisions in certain employment contracts. Neither document is public (p. 19).
GAO also could not find publicly available whistleblower or document retention and destruction policies (pp. 19–20). GAO is careful here, and so are we: IRS instructions describe these as not legally required, while noting that tax-exempt organizations should consider adopting them to support sound operations and tax compliance (p. 20). GAO likewise could not find public information on NAIC fundraising or lobbying revenue and expenses, or on the method by which NAIC makes its tax exemption application available (p. 19).
Finding 5: Accreditation runs on a closed record.
Accreditation determines whether other regulators will accept a state’s solvency examinations, and therefore whether a state’s insurers face one review or many. GAO found that NAIC does not make accreditation findings public, and that NAIC staff described committee discussions as limited to regulators (p. 10). Seven regulators have been suspended since the program began in 1990, five regaining accreditation within two years, with reasons including missing model laws and noncompliance with examination or financial analysis standards (p. 11).
NAIC does publish which jurisdictions are currently accredited and, under specified conditions, acknowledges suspensions and revocations (p. 11, n. 26). What remains closed is the reasoning: the legal reviews, on-site findings, and committee deliberations behind decisions that determine which model laws a legislature is effectively obliged to enact.
Finding 6: The regulated fund the standard-setter.
Approximately 94 percent of NAIC’s 2024 revenue came from fees paid by insurers to submit data, from purchasers of NAIC data, and from users of NAIC systems (p. 13). Filing fees are calculated from company premiums, subject to caps of $108,817 for an individual company and $544,085 for a group in the 2026 budget (p. 13, n. 30).
We do not allege that this funding structure has corrupted any outcome, and neither does GAO. Pinpoint frames the issue correctly as structural rather than criminal. The point is that a body funded almost entirely by the entities its standards govern is precisely the body for which transparent process carries the highest value — and it is the one operating with the least.
The Counterargument, Stated Fairly
The strongest response to this brief comes from GAO itself. GAO’s review of publicly available NAIC documents found governance and financial information generally comparable to what Form 990 collects (p. 18). NAIC publishes its certificate of incorporation, bylaws, conflict-of-interest policy, committee membership lists, annual budgets, annual reports, and audited financial statements reviewed by its executive committee, along with handbooks and manuals used by regulators (pp. 4, 18). In 2025, NAIC began offering all publications free of charge (p. 4, n. 8). Its open meetings policy governs which sessions are public (p. 5, n. 9).
The five state regulators GAO interviewed described real benefits from accreditation, including reliance on other accredited states’ examinations and the associated cost savings, while two industry associations noted reduced regulatory burden from dealing primarily with a single domiciliary regulator (pp. 11–12). Regulators also identified challenges, including staffing shortfalls and the time required to move a model law through a legislature (p. 12).
NAIC is not a rogue institution, and this brief does not treat it as one. The claim is narrower and, we think, harder to rebut: on the specific dimensions where disclosure is most consequential — what senior leadership is paid, what rules bind that leadership, and why a state passes or fails accreditation — the information is not available to the public that ultimately bears the cost.
Recommendations
For state legislatures. Enact a Michigan-style reporting statute. Mich. Comp. Laws § 500.478 already requires NAIC to deliver an annual report including key-employee compensation to that state’s regulator and legislature. States can adopt equivalent language. This requires no federal action, creates no conflict with accreditation, and is the fastest available route to disclosure. Legislatures should consider extending the required report to include accreditation findings concerning their own state.
For state insurance regulators in the region. Publish your own accreditation results. Nothing prevents a commissioner from releasing the legal review, on-site findings, and any corrective action letters concerning that commissioner’s department. GAO notes that regulators may publicly acknowledge changes in their accreditation status (p. 11). A regulator that voluntarily opens its own file would set a regional precedent at no cost to accreditation standing.
For NAIC. Publish a voluntary Form 990-equivalent disclosure covering key-employee compensation, the employee conflict-of-interest policy, and whistleblower and document retention policies. Doing so voluntarily preserves the instrumentality position; continued refusal invites the IRS reexamination that the position may not survive.
For Congress. The Ways and Means Committee should ask the IRS to reexamine whether NAIC continues to satisfy the wholly-owned instrumentality criteria under Rev. Proc. 95-48 and Revenue Ruling 57-128, given the scale and commercial character of its 2026 operations. A determination made when NAIC was a modest regulators’ forum should not govern an entity with $275.9 million in assets that sells regulatory data commercially. Congress should also consider conditioning the exception on affirmative public disclosure equivalent to Form 990 Parts VI and VII.
Conclusion
No single finding in GAO-26-107956 is disqualifying, and GAO drew no adverse conclusion. Assembled, however, the record describes an organization that writes the solvency standards embedded in state law, decides which regulators its peers will trust, draws nearly all its funding from the industry it standardizes, and declines to disclose what it pays its leadership or why it grants and withdraws accreditation.
Insurance markets across the nation are under real stress, and the households least able to absorb it are bearing the most. Those households are entitled to know how the rules governing their coverage are made, and by whom. The Michigan statute demonstrates that a legislature can secure part of that answer whenever it decides to. State legislatures should decide to.