Insurers and regulators are still talking about the definition of “small company” in a draft model regulation that could affect insurance company financial reporting standards.[@@]
Officials at the National Association of Insurance Commissioners, Kansas City, Mo., have included an exemption for “small companies” in a provision of the model that would set qualifications for independent certified public accountants.
The provision would determine whether an auditing firm could perform services other than auditing for an auditing client.
The current version of the provision would exempt companies with less than $25 million in annual direct written and assumed premiums from the auditor qualifications provision.
Insurers would like to see an exemption that would be greater than $25 million, says Steve Broadie, assistant vice president-financial at the Property Casualty Insurers Association of America, Des Plaines, Ill.
Companies believe that expanding access to the exemption is important because the pool of auditors is limited, says Bill Boyd, financial regulation manager with the National Association of Mutual Insurance Companies, Indianapolis.
If regulators define “small company” too narrowly, small insurers will have a harder time getting auditors to perform services other than auditing, Boyd says.
Broadie says regulators and insurers are also continuing to talk about whether a former auditor ought to have to wait until the end of a 1-year “cool-off period” before the former auditor could do other work for a client.