"It is all getting kind of tiresome. I wish we could just work together now to get this accomplished," he said.

But his plea fell on deaf ears.

"It is still early in the process," said Steve Broadie, financial regulation manager for the Property Casualty Insurers Association of America (PCI). "There are still many opportunities along the way to kill this."

For the past year, regulators have attempted to incorporate Sarbanes-Oxley auditor independence and internal control assessment requirements on that segment of the insurance industry that does not face them now because they are nonpublic entities.

They have run into virulent opposition from the carrier representatives who argue the industry is already overly regulated.

PCI president Ernst Csiszar, who assumed his current post after resigning as NAIC president, opposed the additional requirements while a commissioner. He continues to object to them.

"Because the NAIC continues to refuse to assess either the need or the cost, PCI is urging you and other commissioners to become more involved in the process now underway," he wrote to commissioners recently. "We ask that you raise these issues with the regulators and staff working on this project, before new, unnecessary and potentially very costly requirements are added to an already heavy regulatory burden."

Mr. Stolte and other regulators maintain that such cost-benefit analysis can be subjective.

"How could anyone place a price tag on the benefit of early identification of a troubled company by a regulator and the ability of that regulator to have, therefore, avoided the necessity of placing that company into liquidation?" he asked.

Pennsylvania regulator Steve Johnson insists the current leadership, especially his boss and NAIC president Diane Koken, is solidly behind the effort.

Regulators have for the most part developed the first two sections of the proposed additions to the NAIC Model Audit Rule under discussion that deal with auditor and audit committee independence.

One critical unresolved issue concerns a requirement for a "financial expert" to serve on the audit committee of a company board who is independent or not employed by that company.

Opponents say that independent status could make them the target of plaintiff's bar litigation for which the NAIC could not provide immunity.

"The NAIC-proposed safe harbor would not provide any protection against federal or state claims," said John Cullen, chief accounting officer for New York Life. "Those protections would only exist to the extent that governing legislatures or regulators affirmatively adopted the safe harbor position."

The auditor and financial expert sections were approved yesterday for exposure and could gain full NAIC approval by the end of the year if regulators choose to separate them from the thorny issues of internal controls assessments.

Assessments have proved the most burdensome of the Sarbanes-Oxley regime for public companies going through the process, but regulators maintain they will provide early warning signs that would prevent an Enron or WorldCom debacle hitting the mutual insurance industry.

Mr. Stolte said the feedback from public insurers in his state has been positive.

"They all say ?it has been a long time comin' and has forced management to deal with the internal control issue," he said.

The question remains whether or not companies will then be required to get an independent auditor assessment of management's work on the issue.

Indications from the meeting were that the internal control assessment deliberations could drag on through next year.

At least one company representative said the industry will maintain its current full court press to derail the process. But at the same time, it will work to ensure that the new rules are as favorable to the industry as possible, particularly in the area of working to expand the small company exemptions to the greatest breadth possible.

Mr. Johnson, the Pennsylvania regulator, said the NAIC has a history of working to ensure that new processes remain cost effective. He recalled about a decade ago the process of standardizing accounting procedures raised the fear from industry that it could end up shrinking surpluses.

"We heard what you had to say, so we ended up deferring taxes," he said.