What is the NAIC?
If customer service is on your mind when shopping for new insurance, you may have heard of the NAIC Complaint Index. Your DMV may have also asked for your insurance company’s NAIC number when registering a new vehicle. But what is an NAIC number? In fact, what is the NAIC? NAIC stands for National Association of Insurance Commissioners, and it plays a critical role by overseeing insurance regulations nationwide.
What is the NAIC?
Created in 1871, the NAIC’s role is to standardize insurance agencies and their practices in the United States. Although some people have debated whether the insurance industry should be federally controlled, everything has been regulated at the state level for over half a century thanks to the NAIC.
The NAIC is composed of insurance commissioners from each state and the American territories of Guam, American Samoa, Puerto Rico, the Virgin Islands and the Northern Mariana Islands. An insurance commissioner’s duties include:
- Providing educational resources to consumers in their state
- Answering questions about insurance products and policies
- Handling complaints towards insurance companies
- Advising the public on their rights in regards to their coverage plans
- Regulating insurance companies
- Ensuring that laws are properly followed by all insurance companies operating within the state
An insurance commissioner operates similarly to a principal in a school. By standardizing and overseeing the teachers (or in this case insurance companies), he or she makes sure that every student (or consumer) receives the same treatment.
Broadly, the NAIC’s role is the same as an individual insurance commissioner’s, but at the national level. Because it includes all insurance commissioners of every state in one organized entity, it is able to better oversee the entire insurance industry. This ensures that all consumers are given the same fair treatment and that insurance companies fulfill their contractual obligations should a covered event occur for a consumer.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Why does the NAIC matter?
The NAIC’s role is to protect consumers—and, likewise, to help each state’s insurance commissioner protect consumers. It keeps a detailed report of every legitimate complaint lobbied against an insurance company so consumers can better decide if they want to give a company their business. Furthermore, if consumers have a complaint themselves, they can also formally submit one online.
On the NAIC website, consumers can read detailed, easy-to-understand information about every type of insurance, the NAIC guidelines for laws it thinks each state should adopt and submit complaints about their insurance company. Consumers can receive answers to their questions about things like liability limits, coverage types and discounts.
The NAIC also offers professional education. If you are a state insurance regulator or industry professional, you can receive formal training and education through the NAIC. Much like a university, to obtain a professional degree or certificate with the NAIC takes, at minimum, three years to complete.
Every state has an insurance bureau website. The NAIC operates as the national version, even though it doesn’t have any federal powers.
How does the NAIC work?
The NAIC assigns a five-digit code (called an NAIC code or NAIC number) to every insurance company authorized to do business in the United States. If it’s a large company, such as Geico, it can have many NAIC codes for every affiliated company operating under Geico. Because insurance companies offer many types of products (homeowners insurance, auto insurance, life insurance, etc.), each policy type may be treated as a unique company in NAIC’s eyes.
NAIC codes make it easy for consumers to look up complaints about a company and submit complaints themselves. NAIC numbers also help consumers look up where a company is strong (for example, auto insurance), and where it might need some work (for example, homeowners insurance).
What is the NAIC Complaint Index?
The NAIC Complaint Index can be a powerful tool if you’re shopping for the best insurance companies with the highest customer satisfaction. The NAIC keeps track of the customer complaints it receives for insurance companies and categorizes them based on what policy type the complaint was about. It then converts these complaints into a complaint index score. An insurance company will have an overall complaint index score (or a score representative of all complaints it received as a whole) and complaint index scores for each product line it offers.
To understand how complaint index scores work, you must first know that the NAIC compares companies of similar size to determine the baseline, or average, amount of customer complaints. If a company has an average amount of customer complaints, it will have a complaint index score of 1.0. A complaint index score higher than 1.0 means that the company receives more complaints than average, and vice versa — a complaint index score lower than 1.0 indicates fewer complaints than average.
In the table below, you’ll see the NAIC Complaint Index scores for the largest insurance companies by market share, as reported by the NAIC. In the second column, you’ll find the company’s overall NAIC Complaint Index score, which reflects all the complaints the carrier received about all the insurance types it provides combined.
We’ve also included the company’s individual scores for private passenger auto and homeowners insurance. With this table, you might get a sense of a company’s level of customer service, depending on the type of insurance you’re shopping for. Just remember — the lower the company’s complaint index score, the fewer complaints it receives.
| Insurance company | Overall NAIC Complaint Index score | Private passenger auto NAIC Complaint Index score | Homeowners NAIC Complaint Index score |
|---|---|---|---|
| Allstate | 2.06 | 0.96 | 0.52 |
| Chubb | 0.69 | 0.41 | 0.13 |
| Farmers | 3.01 | 1.09 | 0.89 |
| Geico | 1.31 | 0.62 | n/a |
| Liberty Mutual | 1.15 | 2.46 | 0.17 |
| Nationwide | 1.27 | 0.34 | 0.75 |
| Progressive | 1.45 | 0.83 | 1.29 |
| State Farm | 1.47 | 0.70 | 0.35 |
| Travelers | 1.08 | 0.49 | 0.31 |
| USAA | 1.73 | 0.85 | 0.37 |
Since many of these insurance companies offer a suite of policy types (life, commercial auto or commercial liability, for example), their overall scores may not seem to line up with their individual scores for private passenger auto and homeowners insurance. However, this is an excellent example of how you might differentiate a company’s overall customer satisfaction from the customer experience with the particular policy type you are interested in.
Frequently asked questions
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To file a complaint about your insurance provider, you can do so at the NAIC’s Consumer Resources page. Here you can:
- Report fraudulent activities to your state’s commissioner
- File a complaint
- Read about the most common complaints
- Learn about other complaints filed against a company
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Your insurance provider’s NAIC number should be on your insurance card. The number may not have NAIC printed near it. If not, look for a five-digit number. The five-digit number should be the NAIC number. This number will also be on your insurance declaration page.You should also be able to easily find the number online using the NAIC number lookup database. It’s important to note, however, that the NAIC may list multiple entries for each insurance company, depending on the types of products the company offers.
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The DMV may ask for your insurance provider’s NAIC number as a way to easily link your coverage with a specific company. Additionally, it’s not uncommon for the DMV to ask for your company’s NAIC number if it is involved during the claims process. Essentially, the DMV has a database in which your insurance provider’s NAIC code provides the DMV vital information about your insurance company, such as your insurer’s address or the states the company is licensed in.
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Yes, the NAIC oversees insurance in all fifty states plus each U.S. territory. It ultimately serves U.S. citizens, so if you live in the United States or one of its territories, you can take advantage of NAIC’s services.
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