OPINION: Don’t Let Federal Regulators Take Away Nevada’s Unique Insurance Options

Nevadans know better than most how our everyday lives are affected by climate change. From the desert to the mountains, our communities face rising temperatures, drought, and extreme weather events that will drastically change the way we live if not seriously addressed.

Policymakers must focus on confronting these challenges while also protecting the people who live with them daily. Insurance is one of the most important tools to protect families and livelihoods from the harmful effects of climate change, but regulators who are tasked with making policies to tackle this challenge are handcuffed by the consolidation of political power.

That has to change.

Whether it’s health insurance, life insurance, or property insurance, every state must have the ability to craft insurance regulations that fit the needs of its residents and policyholders. The climate crisis makes that need even more pressing. Policies that work even in our neighboring states aren’t necessarily a good fit for Nevada and the differing needs are even more stark when compared to coastal states in New England or the Southeast.

But, unfortunately, if Nevada’s insurance commissioner wants to take action to address drought and wildfire risks, or Connecticut’s insurance commissioner recognizes the need for additional protections against coastal flooding, their hands are currently tied.

Insurance markets are supposed to be regulated at the state level – for obvious reasons like those above. However, state insurance regulators are hamstrung by the National Association of Insurance Commissioners (NAIC), a professional organization that was created to offer research, recommendations, and best practices to its members.

Instead, it has consolidated political power in the insurance regulation space and has positioned itself as a national regulatory body. It creates policies that state commissioners often have no choice but to adopt. Those policies are often proposed by unelected, unappointed staff members who report to the NAIC and not any individual state regulator or policymaker.

The NAIC also makes it impossible for state regulators to respond to the needs of their own residents and markets.

For example, if a western state like Nevada needs to address climate risk by going further than the NAIC’s recommended solvency regulations, it is virtually impossible to do so. Insurance companies that do business in Nevada have to be accredited by the NAIC, but if our commissioner adjusts our state’s regulatory framework to meet our unique needs, then those insurers risk their accreditation.

In other words, if Nevada attempts to create rules that work best for us, the NAIC’s consolidated political power would force insurers out of the state and leave policyholders without coverage.

These are major decisions that need to be informed by reliable, independent data and not made by NAIC staff, but instead by policymakers who understand their markets and policyholders inside and out. There is no one-size-fits-all regulation in any sector of the insurance industry – especially not when it comes to fighting the effects of climate change.

The NAIC recently announced its new slate of leadership for 2024 but has yet to hire a permanent CEO. For the sake of Americans all over the country who face the threat of climate change every day, the NAIC’s new slate of leaders must steer the organization away from staff-dominated projects that don’t solve real problems.

The NAIC has an opportunity with this new leadership to hire a strong CEO to protect regulators’ ability to act on behalf of their individual state’s needs. Regulators, not NAIC staff, are best positioned and empowered to address climate change and protect policyholders. Let’s ensure they keep that power.