Insurers have released a new proposal for strengthening financial reporting requirements for mutual insurers and other insurers that are not publicly traded.[@@]
State insurance regulators have been reviewing the proposal here at an interim meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
The new proposal, drafted mainly by property-casualty insurers, follows a proposal released by the American Council of Life Insurers, Washington. The ACLI proposal includes a provision that would let insurers file groupwide reports rather than separate reports for each legal entity under a group’s corporate umbrella. The ACLI proposal also would take a flexible, “risk-based” approach to guide financial testing and documentation.
The new p-c insurer proposal appears to have the support of the National Association of Mutual Insurance Companies, Indianapolis, a group that has argued that some earlier NAIC proposals for updating financial reporting standards would lead to big increases in administrative costs.
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All of the financial reporting proposals represent efforts to incorporate the spirit of the Sarbanes-Oxley Act of 2002, a financial and internal controls reporting law for publicly traded companies, into insurance reporting standards.
Douglas Stolte, a deputy insurance commissioner from Virginia, and Steve Johnson, a deputy commissioner from Pennsylvania, are welcoming insurers’ work on the financial reporting issue.