The National Association of Mutual Insurance Companies is welcoming a move by federal regulators to review the topic of internal controls reporting requirements for smaller companies.
NAMIC, Indianapolis, is hoping the U.S. Securities and Exchange Commission’s interest in Sarbanes-Oxley Act compliance issues could help it ease the guidelines supported by the National Association of Insurance Commissioners, Kansas City, Mo., according to Neil Alldredge, NAMIC’s senior director of state advocacy.
“We need to see where the SEC falls in relation to what the NAIC proposed,” Alldredge says.
The SEC has sparked new interest in internal controls reporting rules by publishing a concept release, Number 34-54122. In the release, the SEC says it wants to know if members of the public want additional guidance on SOX Section 404 internal control reporting requirements.
SOX itself applies only to publicly traded companies.
In June, the NAIC added internal controls reporting requirements and other amendments modeled after SOX provisions to the Model Regulation Requiring Annual Audited Financial Reports.
Insurers persuaded the NAIC to soften the amendments before adopting them.
Because of those changes, the amended Model Audit Rule exempts insurers with less than $500 million in direct and assumed premium from the new internal controls reporting requirements.
The internal controls reporting rules take effect for bigger companies in 2010.
Most property-casualty and life trade groups decided not to oppose the adoption of the MAR amendments, but NAMIC argued that the NAIC should conduct a formal analysis of the costs and benefits of the amendments.
NAMIC is still reviewing the SEC concept release, but it is hoping it can use the release to persuade the NAIC to revisit the issue and to keep state legislatures from adopting the MAR amendments, Alldredge says.