Proposed changes in state insurance company financial reporting requirements could cost $300 million in the first year, and implementing the changes for mutuals could be about 8 times greater than the estimated benefits.[@@]
Researchers have published those projections in a study sponsored by the National Association of Mutual Insurance Companies, Indianapolis. NAMIC commissioned the study to show regulators that the cost of requiring mutual insurers to comply with the financial reporting requirements of the Sarbanes-Oxley Act of 2002 would outweigh the benefits.
NAMIC and the Property Casualty Insurers Association of America, Des Plaines, oppose implementation of SOX requirements, such as the inclusion of new internal audit control requirements in a revised Model Audit Rule being developed by regulators at the National Association of Insurance Commissioners, Kansas City, Mo.
The American Council of Life Insurers, Washington, says it is still monitoring the study.
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The issue of changes to the Model Audit Rule will receive discussion during the summer NAIC meeting in Boston, which starts Saturday.
The researchers who developed the study find that, overall, the increased costs approximate the same impact as if the industry’s federal tax rates were to be increased by 24%. According to the researchers, compliance with the proposed rules would cost smaller companies twice as much as larger companies.