Opponents of the new financial reporting requirements for mutual companies approved at the National Association of Insurance Commissioners summer meeting here said the measure will face tough sledding in the states over the coming years.
Insurance commissioners approved a series of auditor independence and internal control assessment measures patterned after the Sarbanes-Oxley Act--passed in 2002 in the aftermath of several high-profile corporate failures and scandals involving publicly-held companies.
Regulators have sparred with the mutual insurance industry over the need for such measures, with regulators saying they are required to provide a level of comfort to ensure financial stability, while carriers dismissed them as costly, duplicative proposals and regulation gone awry.
Most of the industry reached a compromise with regulators that softened the internal controls assessment requirements that public companies find burdensome under the federal measure. This version was approved here last week.
However, the National Association of Mutual Insurance Companies remains opposed, suggesting a state-by-state battle looms to fend off the offending regulations. Indeed, NAMIC's senior director of state advocacy, Neil Alldredge, said the amendment to the model audit rule now faces its toughest challenge--convincing state legislators to incorporate it into their model accounting rule.
The National Conference of Insurance Legislators vigorously opposed the measure, most recently at its spring meeting earlier this year, as something that could only be passed by people not up for election by the voters.
"Our experience tells us that most legislators understand that the NAIC SOX proposal is a solution looking for a problem, and that compliance costs greatly outweigh any supposed benefits," Mr. Alldredge said.
Utah Commissioner D. Kent Michie remained the sole vocal opponent of the new law, saying it would impose costly burdens on some small life insurers in his state.
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