Insurers are hoping that the National Association of Insurance Commissioners will build new safeguards for confidentiality into any revision of the Model Audit Rule.[@@]

A panel at the NAIC, Kansas City, Mo., the NAIC/AICPA working group, recently held a discussion on efforts to update the rule to require more company disclosures about matters such as strength of internal controls.

Randi Reichel, a state affairs representative at America’s Health Insurance Plans, Washington, said regulators should combine any new reporting requirements with new rules protecting confidential insurance company information from Freedom of Information Act requests.

AHIP is especially concerned about disclosures that would be required by MAR Section 11, which addresses accountants’ reports on internal controls. The current MAR draft would require that an insurer provide a written report describing any uncorrected material weaknesses in its internal control structure.

“It is really critical that this information be kept confidential,” Reichel said.

Doug Stolte, chair of the NAIC/AICPA working group and deputy insurance commissioner in Virginia, said he understands why companies are concerned about the possibility that class-action attorneys might use information meant for regulators.

In Virginia, public information-access laws would protect the confidentiality of information about weaknesses in internal controls that cropped up during an insurer’s examination, Stolte said.

Reichel told Stolte that the rules governing the status of Section 11 information differ from state to state.