Definition - What does Zone System mean?
The zone system is an triennial examination system the National Association of Insurance Commissioners (NAIC) developed to help states regulate insurance companies. It divides the United States into various geographical zones, and teams from states in each zone examine insurance companies in their respective zones to make sure they are financially in good shape.
Insuranceopedia explains Zone System
Typically, states accept the results of these examinations, and the zone system saves them from having to conduct their own. Moreover, for insurance companies that do business in multiple states in different zones, regulators from different zones work together to avoid reviewing them more than once.