One of the government’s time-honored traditions is bureaucrats abusing their power and engaging in mission creep. Major scandals in the past few years include the U.S. Postal Service (USPS) spying on its customers and the Internal Revenue Service singling out conservative nonprofits for added scrutiny. For all these agencies’ missteps, they are at least ultimately accountable to American citizens through oversight laws like the Freedom of Information Act (FOIA), public processes like interagency audits, and ultimately the ballot box.
A few shady regulatory bodies are immune to these critical safeguards. Chief among them is the National Association of Insurance Commissioners (NAIC). Although the NAIC is a 501(c)(3) nonprofit, it can still impose onerous restrictions on insurance products that millions of customers use without any legal or political redress. If the NAIC is to continue making insurance needlessly expensive, Americans have the right to hold these bureaucrats accountable. Prices will never get under control until taxpayers and customers are allowed back in the driver’s seat.
Households are taking out larger life insurance policies than ever before. According to the American Council of Life Insurers, the average size of a new individual policy increased from $165,000 in 2013 to $206,000 in 2023. But, a 2025 MarketWatch industry report notes, “life insurance statistics reveal a problem: More than 40% of Americans say they need more life insurance coverage, with the percentage of households carrying life insurance dropping steadily.” The perceived need for comprehensive coverage is high, but the high price of insurance puts coverage out of reach for millions of households.
Life insurers have made progress toward affordable and comprehensive coverage by investing premiums in an increasingly diversified portfolio. For example, insurers are holding more of their dollars in products called “collateralized loan obligations” (CLOs), which consist of loans made to multiple businesses. When these businesses (almost always) pay back these loans—often with sizable interest—millions of insurance consumers benefit, and insurers can lower premiums for new enrollees.
But NAIC bureaucrats have branded this promising strategy too risky and want to put a stop to it. The organization has called for insurers to carry more capital whenever they invest in CLOs, which is a tax passed along to consumers.
The NAIC is subjecting insurers to costly requirements to document CLO holdings, and is pushing for stricter capital cushions to accompany investments it doesn’t like. The stringent capital requirements are not commensurate with the low level of CLO defaults over the past few decades. According to a 2014 study by S&P Global, between 1994 and 2013, there was a default rate of 0.41% based on 6,100 CLO tranches. These are largely safe investments that the NAIC has not proved to pose any systemic risk to the insurance sector.
Yet, NAIC’s fixations often automatically become law. As former R Street Institute Finance, Insurance, and Trade Director R.J. Lehmann noted in 2012, NAIC “promulgates model laws and regulations that, in many states, are incorporated into statutory law by ‘reference’; that is to say, a decision by the NAIC to make changes to an existing model can change public policy in the states automatically. This gives the group the patina of a quasi-regulator, although unlike regulators, the NAIC does not have to comply with open public meetings or freedom of information laws.” Lehmann also pointed out that, while NAIC is a 501(c)(3) nonprofit organization similar to countless other public policy groups, it does not have to file annual Form 990 disclosure forms. Opacity at the NAIC is the status quo. That needs to change.
Because of the thick layer of secrecy surrounding this “quasi-regulator,” taxpayers can’t verify basic facts such as the salary of key staff, important meeting details, financial ties, and any evidence of regulatory capture by regulated parties. Even if it turns out that NAIC is acting erratically in promulgating CLO restrictions, there’s nothing analogous to the Administrative Procedure Act (APA) on the books, which ordinarily protects regulated parties from government abuses.
It's long past time for lawmakers to fix these accountability issues. Congress can stipulate that, if the NAIC is to continue acting as a regulator, it must be subject to laws such as FOIA. NAIC must also begin filling out Form 990 or submitting to an inspector general’s audits. Finally, lawmakers must clarify that the full force of the APA binds NAIC.
These reforms would not only restore trust between the government and millions of insurance customers. They would also help realize the dream of abundant and comprehensive life insurance for millions of Americans. It’s time for NAIC to be treated like all the other acronyms in government.
Ross Marchand is a senior fellow for the Taxpayers Protection Alliance.
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