The new legal climate might be making insurance company executives too careful these days.[@@]
Top insurance industry executives gave that assessment here at an insurance seminar sponsored by Standard & Poor’s Corp., New York.
Seminar topics included the unintended implications of the Sarbanes Oxley Act of 2002 and proposals to include SOX-like features in the auditing regulation model under discussion at the National Association of Insurance Commissioners, Kansas City, Mo.
Because of SOX, executives at many insurance companies are on edge and might be less prone to take risk, according to Robert Benmosche, chairman of MetLife Inc., New York.
“For the industry to remain competitive, it has got to take risk,” Benmosche said during the S&P seminar. “If business is afraid to risk making a mistake, it will eventually hurt this country.”
Innovation is especially important in the United States because “it is increasingly difficult for us to be a country of low-cost producers,” Benmosche said.
One SOX provision, Section 302, requires managers of publicly traded U.S. companies to certify that they have reviewed internal controls, that the controls are fairly presented in financials and that any material changes have been noted.
SOX Section 404 requires that a public company’s managers and auditors attest to the effectiveness of the company’s internal controls.
Efforts to include SOX-like features in the NAIC’s Model Audit Rule might require mutual insurers with more than $25 million in assets to comply with requirements similar to those in SOX Section 302 and SOX Section 404.