Dropping an NAIC-initiated proposal to add content from Section 404 of the Sarbanes-Oxley (SOX) Act to state solvency regulation, the NAIC’s Title IV Subgroup Tuesday accepted an industry group’s modified proposal on internal control that includes a $500-million exemption threshold.
“We can sell this,” said Subgroup Chair Steve Johnson, a Pennsylvania deputy commissioner, of the alternate proposal offered by industry which incorporates content weakened SOX-like measures for non-public insurers’ internal accounting control. The original NAIC proposal to build SOX-like content into state regulation—subjecting mutuals and other non-public insurers to such regulation—met heavy resistance from NAMIC and others representing the non-public insurance industry. Johnson also said that the alternate proposal was needed to complete the “regulatory quilt” in state solvency regulation.
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