Edited By : Emily Miller
This page features 4 Cited Research Articles

Annuity.org content is meticulously reviewed to ensure it meets our high standards for readability, accuracy, fairness and transparency.

Annuity.org articles are spellchecked, grammatically correct and typo-free. Annuity.org editors may revise content for clarity, logic, flow and meaning. Annuity.org only uses credible sources of information.

This includes reputable industry sources, select financial publications, credible nonprofits, official government reports, court records and interviews with qualified experts.

The Insurance Regulatory Information System (IRIS) is a database collection managed by the National Association of Insurance Commissioners, or NAIC. The data is used to determine the financial health of insurance companies.

The NAIC instituted the Insurance Regulatory Information System, or IRIS, in 1972 to evaluate the financial condition of insurance providers. Because insurance companies issue annuities, life insurance policies and other financial products, it is important for consumers to know that the companies they do business with are financially sound and can be trusted to handle their money.

According to the NAIC, “the NAIC Insurance Regulatory Information System (IRIS) is a collection of analytical solvency tools and databases designed to provide state insurance departments with an integrated approach to screening and analyzing the financial condition of insurers operating within their respective states.”

How Does the Insurance Regulatory Information System (IRIS) Work?

Chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories govern the NAIC, and the organization provides data and analyses for commissioners to regulate the insurance industry.

Insurance providers are required to file annual and quarterly financial statements with the NAIC. Hard-copy statements are no longer required as of 2008, and companies can now submit their financials electronically through the NAIC’s Internet Filing portal.

Based on the financial information submitted, the IRIS calculates ratios for each company.

What Are IRIS Ratios?

IRIS ratios help determine an insurance company’s financial solvency, or its ability to cover claims and financial commitments to its customers.

The IRIS ratios provide a helpful, standardized snapshot of the company’s financial security. The NAIC sends each company their ratio results and also posts a downloadable publication with all IRIS ratio results on its website.

IRIS measures 13 ratio ranges for property and casualty insurance providers and 12 ratio ranges for life, accident and health insurance companies. Each range has its own formula for calculation. For instance, for the Life, Accident & Health Overall Ratio 1 – Net Change in Capital and Surplus, the formula is as follows:

Net change in capital surplus

The calculated result of each category’s formula should fall into the ratio ranges established by the NAIC, expressed below:

All ratios reported as percentages, rounded to the nearest percent. For Ratios 10 and 11, results are rounded to the nearest tenth of one percent.

Ratio Ratings
IRIS RATIOUnusual Values Equal to OverUnusual Values Equal to Under
Net change in Capital and Surplus50-10
Gross Change in Capital and Surplus50-10
Net Income to Total Income (Including Realized Capital Gains & Losses)--0
Adequacy of Investment Income900125
Non admitted to Admitted Assets10--
Total Real Estate & Total Mortgage Loans to Cash & Invested Assets30--
Total Affiliated Investment to Capital and Surplus100--
Surplus Relief
(Over $5 Million Capital and Surplus)
($5 Million or Less Capital and Surplus)




Change in Premium50-10
Change in Product Mix5.0--
Change in Asset Mix5.0--
Change in Reserving20-20
U indicated result is automatically considered normal.
NR indicates no result is calculated

What Are IRIS-Branded Risk Classifications?

When an insurance company has a value outside the usual ratio range, an analyst can identify the specific risk area involved. IRIS has nine branded risk classifications:

  • Credit: CR
  • Legal: LG
  • Liquidity: LQ
  • Market: MK
  • Operational: OP
  • Pricing/Underwriting: PR/UW
  • Reputation: RP
  • Reserving: RV
  • Strategic: ST

Who Does the Insurance Regulatory Information System (IRIS) Help?

The IRIS primarily serves to help inform insurance regulators of the companies who may be in danger of insolvency, or being unable to pay their debts. According to the NAIC, “IRIS helps by providing solvency tools and databases that highlight those insurers that merit the highest priority in the allocation of the state insurance regulators’ resources, thus directing those resources to the best possible use.”

In addition to helping state regulators, IRIS also helps the consumers they protect. Insurance companies must follow specific regulations, including annuity regulations, from the state insurance commissions and the NAIC. These rules are in place to safeguard the buyers.

Interested in Buying an Annuity?
Learn about the different types of annuities and find out which one is right for you.

Consider this: if an insurance company is in financial trouble, the company may become insolvent if it continues along the same path. Its customers may lose their insurance coverage, or the company may not be able to cover payments to those who have purchased an annuity.

However, if state regulators can intervene before this happens, regulators may be able to help the company recover before the customers are impacted.

IRIS ratios can also directly benefit the insurance companies, as the numbers point out areas of concern and can help encourage positive change.

What Happens When a Company’s Ratios Fall Outside the Standard Range?

State insurance regulators are notified if a company’s IRIS ratios fall outside the standard range. The regulators then take a closer look at the company’s data and reports. Although a ratio outside the standard range often warrants further review of the company, it does not always translate to a company-wide issue.

For example, the accuracy of IRIS ratios depends on the accuracy of the company’s submitted data. If there are any errors in reporting, the errors will be reflected in the IRIS ratio results.

Also, extenuating circumstances not related to the company — such as equity market performance — can impact the results.
If the insurer is at risk of becoming insolvent, the company can work with state regulators to fix the IRIS-identified issues.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: September 3, 2021

4 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. National Association of Insurance Commissioners. (2021). Financial Data Repository 2020 Annual and 2021 Quarterly Financial Statement Participation Packet. Retrieved from https://content.naic.org/sites/default/files/inline-files/Participation%20Packet%2012.09.2020.pdf
  2. National Association of Insurance Commissioners. (n.d.). Financial Statement Filing. Retrieved from https://content.naic.org/industry_financial_filing_if_guide.htm
  3. National Association of Insurance Commissioners. (2020). Insurance Regulatory Information System (IRIS) Ratios Manual: 2020 Edition. Retrieved from https://content.naic.org/sites/default/files/publication-uir-zb-iris-ratios-manual.pdf
  4. National Association of Insurance Commissioners. (n.d.). Our Story. Retrieved from https://content.naic.org/about