State regulators considering an "alternate proposal" for internal accounting control have failed to heed the caution from U.S.Representatives Michael Oxley and Richard Baker that any extension of the Sarbanes-Oxley Act of 2002 to state regulation be reconciled with additional benefits to policyholders, according to the National Association of Mutual Insurance Companies (NAMIC).
"We do not believe this caution was observed in the proposal now pending," wrote Financial Regulation Manager Bill Boyd in a letter to the National Association of Insurance Commissioners (NAIC) on Friday. With no basic assessment of where existing solvency regulation may be weak, imposition of the internal control prescriptions now contemplated in the "Annual Financial Reporting Model Regulation," cannot be justified and should not be approved. That regulation, pending before the NAIC's Financial Condition (E) Committee, is a re-write of the NAIC's existing "Model Audit Rule."
Congressmen Oxley and Baker included their caution in a letter last September to former NAIC President Diane Koken.
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