Canadian Underwriter

Regulators consider subjecting all U.S. insurers to Sarbanes-Oxley provisions

March 17, 2004   by Canadian Underwriter

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Regulators in the U.S. are getting an earful from insurers at the prospect that all insurance companies, whether publicly-traded or not, could be subject to Sarbanes-Oxley.
At the annual meeting of the National Association of Insurance Commissioners (NAIC), the plan, which would see major requirements of the new corporate governance rules applied to annual audited financial reports for all insurers.
Insurers say the move will add expenses. “We do not believe that the case has been made for general application of the Sarbanes-Oxley Act to non-publicly traded insurers,” says Stephen W. Broadie, assistance vice president of the Property Casualty Insurers Association of America (PCI). “Insurers are already subject to a far more extensive regulatory structure than most publicly-traded companies and regulators have not shown that reporting standards are lax in any way.”
Other hot buttons at the annual meeting include the development of “best practices” by the regulators for credit scoring the use of credit history in underwriting. PCI says the process is a waste of time because credit scoring has been the domain of individual states, most of which have already devised guidelines which would only be duplicated by the best practices document. “We believe the [NAIC credit scoring] working group’s focus should be consumer education which is more in line with the NAIC’s new ‘Get Smart About Insurance’ campaign,” says Robert Zeman, senior vice president for PCI.

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