At NCOIL's spring meeting that ended this week, the group's executive committee voted to have their president, Texas Rep. Craig Eiland, D-Galveston, send the NAIC a letter expressing the group's opposition to the new audit requirements.

Robert Zeman, senior vice president for the Property Casualty Insurance Association of America, was encouraged by NCOIL's move.

"This is extremely good news, especially coming before renewed debate on the issue at the upcoming NAIC meeting," he said.

The NAIC will meet in Salt Lake City March 12-15 for its spring meeting. Other items on the agenda include initial discussion of a model law on the use of property loss history in underwriting and more debate on possible revisions to the NAIC model broker law.

But it is the proposed addition of those Sarbanes-Oxley public company rules to mutual companies in the form of an amendment to the model audit rule that has the insurance industry most concerned.

"Unlike companies in most other industries, insurers must already comply with a vast array of requirements that achieve the goals for which Sarbanes-Oxley was enacted," Mr. Zeman said.

For the past two years, regulators and industry have been working together to reach some compromise on issues such as internal controls monitoring and assessment and auditor independence.

If the measure is put in place, nonpublic insurance companies, like their public counterparts now, would have to conduct assessments of the internal controls they have in place to stave off the sort of corrupt accounting practices that brought down Enron and WorldCom over three years ago.

In addition, they would have to switch auditors every few years and make sure their audit committees had a certain number of independent directors.

Also, company chief executive officers would be required to sign off on financial reports.

Industry representatives and regulators are currently negotiating an annual premium threshold to allow for small company exemptions.