Regulators put off final approval of a provision to impose Sarbanes-Oxley reporting requirements on mutual companies at a key committee hearing yesterday.
Members of the National Association of Insurance Commissioners Financial Condition Committee set tentative plans to vote on the measure May 18, if the proposed changes could be drafted by then.
The planned amendments to the Model Audit Rule would set new reporting requirements on internal controls, as well as new rules on the number of independent directors a mutual company must have on its board.
Most of the insurance industry, with the exception of the National Association of Mutual Insurance Companies, has supported the watered-down model reached after two years of compromise efforts with the regulators.
William Boyd, NAMIC's financial regulation manager, said it was unusual that such detailed work would go on at the major committee level like what happened yesterday in Atlanta. “That the committee is engaged in such detailed work shows that the rush is on,” he said.
Among the changes the committee is considering as a result of yesterday's deliberations are liberalization of the independent director requirement for an insurer's audit committee, along with a one-year postponement of the effective date to 2011.
Another change would index the proposed threshold of $500 million in annual premium for companies to be exempt from the internal controls reporting requirements to allow for rising prices, but no index was decided on.
Steve Broadie, financial regulation manager of the Property Casualty Insurers Association of America, urged regulators not to approve the draft until an implementation guide is also approved.
But Virginia's deputy insurance commissioner, Doug Stolte, has repeatedly said he would not follow that course and has promised no back-door regulation through the guide.
Mr. Boyd said that with the May 18 date for committee approval now only tentative, it was possible the full NAIC body could not vote on the measure until fall.
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