INDIANAPOLIS (May 18, 2005)—During the summer NAIC meeting, the National Association of Mutual Insurance Companies (NAMIC) will present a study showing costs and benefits of applying certain Sarbanes-Oxley-type requirements to non-public insurers. The study will address the business case on the utility of the Sarbanes-Oxley Section 404 content and whether it is financially rational to impose it on mutual insurers.
NAMIC Financial Regulation Manager William Boyd made the announcement Wednesday in Chicago, during a meeting of the Title IV Subgroup of the NAIC/American Institute of Certified Public Accountants Working Group.
The NAIC has proposed inclusion of Sarbanes-Oxley content in state regulation of those mutual and other insurers that are not regulated by the SEC. The Section 404 content is perceived by insurers, both public and non-public, as burdensome and expensive.
“NAMIC has objected on a number of fronts to such content being added to state regulation,” said Boyd, “especially the Section 404 content, which requires extremely detailed documentation of the reporting insurer’s internal controls and attestation by independent auditors about internal control.”
Pennsylvania regulator and working group chairman, Steve Johnson, asked industry to prepare a new draft of the currently pending proposal to embed 404 and other Sarbanes-Oxley content into the Model Audit Rule, suggesting that this be received after the summer NAIC meeting. Despite his earlier statements that work should be substantively complete by the end of 2005, Johnson said he did not want to hurry the process. He suggested that individual states, by statute or regulation, could adopt Sarbanes-Oxley content.
“Means of adoption has been an exceedingly sensitive matter to NAMIC which believes the magnitude of the proposed changes cannot be legally accomplished by mere incorporation by reference,” said Boyd. “Though offering mixed signals whether there would be any retreat from close adherence to the Sarbanes-Oxley Act’s burdensome Section 404 material, Johnson’s request may mark an effort to moderate the burden of what is currently proposed and pending—after lengthy objections raised by NAMIC and others in the industry.”
“NAMIC will continue to oppose the application of SOX-like requirements to non-public companies,” Boyd concluded.
Posted: Wednesday, May 18, 2005 12:00:00 AM. Modified: Wednesday, May 18, 2005 10:55:21 AM.
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