Mr. Chamness said the fundamental issue of shareholder versus policyholder protection was not addressed by the new proposal. "A key principle in our opposition is that Congress deliberately chose not to subject non-public companies to SOX [the federal Sarbanes-Oxley accounting disclosure law], which was designed to benefit public company investors," he said.

Regulators patterned the new internal control as well as audit committee independence and CEO attestation rules after the Sarbanes-Oxley Act, passed in the wake of the WorldCom and Enron accounting scandals of 2002.

As an organization made up for the most part of mutual companies, NAMIC has taken the lead in opposition to the measure, which it believed in its original form would have cost the affected companies $300 million in compliance costs.

On Monday, an NAIC working group approved a compromise plan for internal control reporting requirements worked out with industry representatives that reduces the regulatory requirements from the comparable SOX measure for public companies.

After approval by the plenary NAIC body of not only the internal controls segment but also those dealing with audit committee independence and CEO attestation, the measures will be incorporated into the NAIC Model Audit Rule.

The revised rule will then go to the nation's legislatures for adoption with states that fail to approve the measure facing loss of NAIC accreditation. Full nationwide adoption is expected by the end of the decade, according to one industry observer.