Summary: Pursuant to a congressional request, GAO reviewed the effectiveness and reliability of the National Association of Insurance Commissioners' (NAIC) Insurance Regulatory Information System (IRIS) for early detection and warning of financially troubled property and casualty insurers.
GAO found that: (1) state insurance regulators and industry officials had varying opinions about IRIS effectiveness and usefulness; (2) states used IRIS results differently; and (3) state regulators used IRIS as an additional source of information to confirm the status of insurance companies. GAO also found that IRIS deficiencies included: (1) inability to independently verify insurer-prepared financial statements and time lags of up to 15 to 18 months; (2) limited indicators of solvency problems; (3) difficulty in assessing the many different categories of companies; (4) failure to consider some readily available sources of solvency information; and (5) identification of companies that might not require regulatory attention. In addition, GAO noted that lack of access to requested information limited the extent of its analysis.
