Regulators, however, say they need the changes to create an additional solvency monitoring tool.

The changes under discussion during the interim meeting concern a draft to Title 4 of the Model Audit Rule which addresses internal audit controls.

If consensus can be reached, Steve Johnson, deputy commissioner for the Pennsylvania insurance department, who is spearheading this portion of the effort, said the work might be sent along by the end of the year to a working group of the NAIC and American Institute of Certified Public Accountants.

The latest proposal which the NAIC discussed was drafted primarily by property-casualty insurers and follows a proposal released earlier by the American Council of Life Insurers, Washington.

The newest proposal includes provisions to have filings come from the top corporate level of an insurance enterprise rather than for each legal entity under a company's corporate umbrella and taking a risk-based approach toward identifying the scope of documentation and testing.

The latest proposal is encouraging regulators and insurance trade groups, but for different reasons. Regulators spearheading the effort to change the Model Audit Rule, including Doug Stolte, deputy commissioner of Virginia, and Mr. Johnson, say that they view the proposal as a break from industry's past attempts to "kill" the model.

NAMIC and other industry groups cite among their reasons for supporting the new proposal an increase in the scope of companies that would be exempt from the rule to include companies that had under $500 million in premium. They also note language that addresses confidentiality concerns over information in the report.

These groups include: the Reinsurance Association of America, Washington; the National Alliance of Life Companies, Rosemont, Ill.; the American Insurance Association; the Property Casualty Insurance Association of America, Des Plaines, Ill.; America's Health Insurance Plans, Washington; and, the Blue Cross/Blue Shield Association, Washington.