Summary

Despite wider state adoption of National Association of Insurance Commissioners (NAIC) financial regulation standards, GAO is not convinced that accredited state insurance departments can effectively regulate insurers within their borders. First, the financial standards are, for the most part, general and have been interpreted permissively by accreditation review teams. Second, the accreditation program has focused too little on state insurance departments' implementation of regulatory authorities and required practices. Third, review teams' documentation of their accreditation decisions do not consistently support their compliance decisions. To be successful, GAO believes that the NAIC accreditation program needs to resolve these shortcomings.