What is the Insurance Regulatory Information System?
The Insurance Regulatory Information System (IRIS) is a system containing databases and tools to analyze the financial statements of different insurance companies. It is primarily used by the National Association of Insurance Commissioners (NAIC) to determine the credibility of insurance companies. The Insurance Regulatory Information System (IRIS) is an electronic system designed to provide financial analysis for insurance companies and give reliable data on how well a company is able to meet its long-term financial obligations. IRIS is run by the National Association of Insurance Commissioners (NAIC). NAIC uses the database and tools of IRIS to weight an insurance company’s financial solvency.
What Does the Insurance Regulatory Information System Do?
IRIS was established in 1972 and the National Association of Insurance Commissioners, NAIC has been at the helm of its affairs. A company’s ability to continue operations in the future is paramount to NAIC and for a company to last through the age, it must have the capability to attend to all financial needs. Hence, NAIC uses that database provided by IRIS to check a company’s present financial status and the likelihood to maintain the status in the nearest future or otherwise. IRIS does not only help NAIC manage and examine insurance companies but also serve as a problem detector for the companies. That is, if IRIS notices financial challenges with a company, this is not just for NAIC to regulate the company but to also avail the company a chance to look into the financial problems and make amends. There are defined ratios that an insurer or company must meet before it can be said to be fit for business. IRIS determine these defined ratios and point out insurance companies that are considered acceptable and those that need more examination by NAIC. The financial ratios as calculated by IRIS are used to generate a report and categorize insurance companies on how well they have met the financial ratios. However, companies that fall short of the acceptable financial ratios are not left unattended to, rather, the are closely examined and regulated by NAIC. Although, through the categorization, IRIS places the companies at a competitive leve and at the same time identifies that some companies may be below the expected range due to the economic difficulties and financial in the countries in which they operate. Hence, with IRIS at NAICs disposal, the examination, evaluation, regulation and monitoring of insurance companies have become easier as IRIS provide detailed information about all the insurance companies which may not even be found in the database of the states in which they operate.
