Model Legislation: NAIC Transparency and Accountability Act

Model Legislation: The Legality, Transparency, and Accountability in State Insurance Regulation Act

Michigan has required the National Association of Insurance Commissioners to report to its legislature since 1998. Forty-nine states have not. The Southwest Public Policy Institute has prepared model legislation. Here is the bill.

Download the model act

The formula that determines how much capital your insurance company must hold against every asset on its books was not written in your state capitol. Neither was the form your insurer files its financial statements on, nor the standard that decides whether the examination your regulator performs will be accepted by the other forty-nine states.

Those rules come from a private nonprofit corporation in Kansas City, Missouri. Every state participates. Almost no voter has heard of it.

In June 2026, the U.S. Government Accountability Office published a review of that organization at the request of the chairman of the House Ways and Means Committee. The report made no recommendations and found no wrongdoing. What it documented is nonetheless a straightforward accountability problem: the NAIC does not make its accreditation findings public, does not disclose what it pays its chief executive, and draws roughly 94 percent of its revenue from the industry whose standards it writes.

We set out that record in detail in Regulation Without Disclosure, published July 29, 2026. That paper ends with a recommendation to state legislatures. This page is the instrument that carries it out.

What the Act does

Section 1 — Purpose. Grounds the Act in the federal statutes that assign insurance regulation to the states: McCarran-Ferguson, Gramm-Leach-Bliley, and Dodd-Frank. Congress left insurance policy to state legislatures. It did not authorize any private association to set that policy on their behalf.

Section 2 — Transparency of state employees; state sovereignty protected. Conditions the participation of the commissioner and department staff in NAIC proceedings on disclosure at home. Before voting on an NAIC model law, manual standard, or guidance document, the commissioner must give the legislature’s insurance committees thirty days’ notice, post the document publicly, and hold an open meeting. Closed-door attendance is restricted, congressional testimony given on the NAIC’s behalf must be previewed by the legislature, and the department must report quarterly on the staff time and public money it spends on NAIC activity.

This section does not regulate the NAIC. It regulates the state’s own employees, which is unambiguously within a legislature’s power.

Section 3 — Required NAIC report. The Michigan provision. An annual filing with the commissioner and both legislative insurance committees, posted publicly, covering: the association’s activities; an audited fiscal report including officer compensation and the five highest-paid managerial salaries; every standard a state must adopt to keep its accreditation, with an explanation of why no less restrictive alternative would serve the public as well; the standards that are not accreditation conditions; the policies meant to keep accreditation decisions on the merits; and the policies meant to keep deliberations open. The insurance committees then review that report on a set schedule and may take testimony on it.

Section 4 — Payment of NAIC fees by domestic insurers. Makes payment of NAIC fees by domestic insurers subject to authorization by the commissioner, on a record, weighing enumerated factors: how solvency revenue is used, whether fees track premium volume rather than the cost of service, the association’s accountability to legislative and regulatory authority, the effect of its standards on state sovereignty, and whether its proceedings are open. The order is subject to de novo judicial review.

Section 5 — Definitions. Defines fee, NAIC standard, solvency oversight, and solvency-related revenue, so that the distinction between solvency work and everything else is stated in law rather than assumed.

Three tiers. Take the one your state can pass.

We do not expect any legislature to introduce this Act whole in its first session, and it is drafted so that it does not have to be.

Tier 1 — Section 3, on its own. This is the Michigan floor. It has existed in another state’s code for more than a quarter century. It requires no federal action, imposes no obligation on any insurer, spends no money, and does not touch accreditation status. If a legislator wants a bill that is difficult to argue against, this is it.

Tier 2 — Sections 2 and 3. Adds transparency to the state’s own participation. Section 2 is a housekeeping measure about state employees and public records, not a measure about the NAIC, and it should be defended on those terms.

Tier 3 — the full Act. Section 4 is the leverage. It is also the provision that will draw the most organized opposition, from the association and from domestic carriers who use its systems. A state that includes Section 4 should expect a fight and should have an answer ready on how insurers continue to meet their existing filing obligations while an authorization order is pending. We are glad to help work through that language.

Adopt any tier. Adopt one section. Cut what does not fit your code. The point is the disclosure, not the drafting.

The record behind the bill

From GAO-26-107956, as documented in Regulation Without Disclosure:

• The NAIC has been excepted from filing IRS Form 990 since 1955, on a determination that it is an instrumentality wholly owned by the states. The exception was reaffirmed in 1999. No determination since has asked whether the rationale still fits the institution.
• In 2024 the association reported $161.4 million in revenue and $275.9 million in assets, operated offices in three cities, ran a national accreditation program with suspension authority, and sold regulatory data commercially.
• Approximately 94 percent of that revenue came from insurers filing data, purchasers of NAIC data, and users of NAIC systems.
• The NAIC does not make accreditation findings public, and staff described the relevant committee discussions as limited to regulators. Seven regulators have been suspended since the program began in 1990.
• Executive compensation is not disclosed publicly. It is provided to one state as a matter of law: Michigan, under Mich. Comp. Laws § 500.478.
• The published conflict-of-interest policy covers member commissioners. GAO could not locate a public policy covering key employees, nor public whistleblower or document retention policies.

The counterargument, which we take seriously. GAO found that the governance and financial information in the NAIC’s public documents is generally comparable to what a Form 990 collects. The association publishes its bylaws, budgets, annual reports, and audited financial statements, and made its publications free of charge in 2025. Regulators told GAO that accreditation saves real money by letting states rely on one another’s examinations, and industry groups noted the reduced burden of dealing with a single domiciliary regulator. Those benefits are genuine, and nothing in this Act is designed to disturb them.

Our claim is narrower. On the three dimensions where disclosure matters most — 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 pays for the result.

What this bill is not

It is not an attack on the NAIC. The association is not a rogue institution and this Act does not treat it as one. Sections 2 and 3 ask for disclosure of the kind that nearly every comparable organization already provides. The Conference of State Bank Supervisors and the North American Securities Administrators Association both file Form 990. Both sit alongside the NAIC on the Financial Stability Oversight Council.

It is not federal preemption by another name. The Act rests on the opposite premise. Congress left insurance regulation to the states on the understanding that states would do the regulating. A legislature reclaiming visibility into standards written on its behalf is McCarran-Ferguson working as designed.

It does not put accreditation at risk. Section 3 imposes a reporting obligation, not a substantive standard. Michigan has been accredited throughout the life of its statute.

It is not a consumer-protection rollback. Nothing here changes a solvency standard, a reserve requirement, or a policyholder protection. It changes who gets to read the file.

For legislators and staff

SPPI has testified in roughly a dozen states. We will help with any of the following at no cost:

• Conforming the draft to your state’s code, including the bracketed placeholders for appointed versus elected commissioners
• Written or in-person committee testimony
• Fiscal note support, including a realistic estimate of the department’s reporting burden
• Background briefings for members and staff, on or off the record
• A one-page member summary you can hand out in committee

Support this work

SPPI publishes everything it produces without a paywall, including the model legislation on this page. That work is funded by people who think state policy deserves the same scrutiny Washington gets.

Fifty states delegated their rule making to an organization they own. One of them thought to ask what it does with the authority. Which state will be the second?