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Regulators Hold Firm on SOX Rules for Mutuals

Regulators Hold Firm on SOX Rules for Mutuals

by Rick Turoczy on February 16, 2005

A Pennsylvania insurance official heading a panel of state regulators met with mutual insurance company representatives last week and held firm to the notion that they need more regulation to insure their solvency.

At issue is a measure the National Association of Insurance Commissioners’ panel is considering that would have such non-traded companies institute internal assessment control procedures that mirror those requirements for stock companies that are contained in the federal Sarbanes-Oxley Act.

Steve Johnson, deputy insurance commissioner for Pennsylvania, who chairs the so-called Title IV subgroup of the panel looking at applying federal Sarbanes-Oxley Act disclosure and accounting rules for non-public insurers, said at the meeting in Orlando, Fla., that it was doubtful that a cost-benefit analysis could be applied to addition of such rules.

Title IV refers to the section of the federal law that requires yearly annual assessment by management of the company’s internal control measures, along with a separate attestation by the company’s auditors.

“How can it be a bad thing to have management make representations about internal controls?” Mr. Johnson asked.

Regulators Hold Firm on SOX Rules for Mutuals

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