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August 12, 2005 at 08:00 PM
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.
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.
