Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) voted to amend its Model Regulation Requiring Annual Audited Financial Reports, commonly known as the Model Audit Rule. The amendments relate to auditor independence, corporate governance, and internal control over financial reporting.
The adopted revisions require that insurance companies have an audit committee and indicate that some audit committee members may need to be independent from management. The adopted revisions also require that insurance companies with $500 million or more in direct and assumed premium file a report with the state insurance department regarding its assessment of internal control over financial reporting. The scheduled effective date is January 1, 2010, notes Kansas City, Mo.-based NAIC.
"This was a substantial effort between the NAIC and the insurance industry that represents the important work we as state insurance regulators do when we develop models that deal with highly contentious issues," said Maine Bureau of Insurance Superintendent and NAIC President Alessandro Iuppa. "The adoption of this regulation strengthens the integrity of the insurance industry's statutory financial reporting."
The adoption followed an extensive vetting process by the Financial Condition (E) Committee, which took up the Model Audit Rule in March 2006 after a lengthy and deliberative process that dates back to 2003 by the NAIC/AICPA (E) Working Group.
Financial regulators and industry representatives are producing an implementation guide to assist in the application of and the compliance with the new requirements. The implementation guide is expected to go to the Financial Condition (E) Committee over the summer.
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