Which statement about the NAIC is correct?

Which statement about the NAIC is correct?

• A. NAIC enacts laws that automatically apply nationwide
• B. NAIC sets premium rates for insurers
• C. The NAIC prepares model laws, regulations, and guidelines for adoption by the states
• D. NAIC licenses agents directly

Answer: (C)

The NAIC’s role is to act as a cooperative body for state regulators, drafting model laws, regulations, and guidelines that states may adopt. It doesn’t have authority to enact nationwide laws, since each state passes its own statutes. It also doesn’t set premium rates; rate making is handled by insurers within the framework of state-regulated rate approvals. Licensing of agents is likewise a state-regulated function, not something the NAIC does. By providing these model laws and guidelines, the NAIC helps harmonize regulatory standards across states while keeping the actual rulemaking in the hands of the states.

The NAIC’s role is to act as a cooperative body for state regulators, drafting model laws, regulations, and guidelines that states may adopt. It doesn’t have authority to enact nationwide laws, since each state passes its own statutes. It also doesn’t set premium rates; rate making is handled by insurers within the framework of state-regulated rate approvals. Licensing of agents is likewise a state-regulated function, not something the NAIC does. By providing these model laws and guidelines, the NAIC helps harmonize regulatory standards across states while keeping the actual rulemaking in the hands of the states.