Debate On SOX Model Reg Continues

Additionally, insurers with under $100 million in premium could request an exemption from a provision that would prohibit an independent CPA from engaging in non-audit services unless the activity was approved in advance by the insurers audit committee.

Doug Stolte, a Virginia regulator who is chair of the NAIC/AICPA working group, says progress is being made on both the detail work of the model and on bringing regulators and insurers on board with the idea of a model. “I believe that there is a lot less rhetoric on killing it.” There is more of a willingness to discuss it, he continues.

Section 16 of the draft that addresses a requirement by management to certify as to the internal controls over financial reporting still needs to be worked on, says Stolte, and that will be a more contentious issue.

But at a seminar sponsored by the American Bar Association during the NAIC meeting, Stolte said the work on the model is worth the effort. He cited the need for ensuring accurate financial reporting in order to create better solvency oversight.

“Every other industry has addressed SOX head on,” he says. “The industry is not immune to a big corporate failure.”

Members of the industry still maintain the regulation is not needed. For instance, the Life Insurers Council, Atlanta, says it opposes the imposition of additional regulation and the costs associated with it.

Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.