Compliance

Washingon, D. C. - Members of the PIA Insurance Technology Coalition met with Congressional staffers on Capitol this week to discuss data security/identity theft and its potential effect on the insurance industry.

Brookfield, Wis., - Fiserv, Inc., a financial management and compliance software provider, released a software system designed to be compliant with the Sarbanes Oxley Act. The Nautilus SOX solution is a tool that uses document management technology for enterprise-wide compliance with the 2002 federal legislation, and similar provisions that the National Association of Insurance Commissioners is expected to embrace for non-public insurers. The software provides an automated, searchable system for documenting internal controls and business processes to help ensure SOX compliance. With Nautilus SOX, users can create, collaborate, log, execute and conclude business transactions in a structured, efficient environment. It also provides users immediate access information regarding a process or project, including all outstanding issues, approvals, statuses, discussions and communications. The system's framework of pre-defined indexes and templates enables users to monitor and record all external and internal events affecting SOX compliance--from risk assessment to controls testing and remediation. Notifications and scheduled reviews can be set up to ensure that important deadlines are met, and the system can automatically route content between collaborating participants.

Springfield, Mass. - MassMutual Financial Group, Springfield, Mass., announced the acquisition of New York-based Golden Retirement Resources Inc., (GRR) a privately held firm that develops and distributes products and services for the retirement-income market. Comprising member companies with more than $350 billion in assets, MassMutual Financial Group is a global, diversified financial services organization providing life insurance, annuities, disability income insurance, long-term care insurance, retirement planning products, structured settlement annuities, trust services, money management, and other financial products and services. Under the transaction, MassMutual Holding, LLC, a wholly owned subsidiary of Massachusetts Mutual Life Insurance (MassMutual) purchased a majority interest in GRR (including all intellectual property), and intends to own the entire company by year-end. No financial terms were disclosed.

Salt Lake City - GE Healthcare, a $14 billion unit of General Electric Company that is headquartered in the United Kingdom, and Intermountain Health Care, a Salt Lake City-based integrated health care system, announced the organizations' joint project to develop a new advanced electronic medication administration record, also known as an eMAR, which will better enable collaboration among a patient's care team.

Over the past three years, publicly held companies in the insurance industry have become painfully familiar with the stringent requirements of the Sarbanes-Oxley (SOX) corporate governance law.A senior-level executive with Chicago-based global brokerage firm Aon Inc., confirmed that the company's audit fees skyrocketed 53%, from $10 million in 2003 to $15.3 million in 2004. And, with annual revenue of $800 million and income of approximately $73 million, RLI Corp., a Peoria, Ill.-based specialty insurer, absorbed Section 404 compliance costs last year of $1.9 million.

The Insurance Accounting & Systems Association (IASA), Durham, N.C., announced today that their members have elected Mark Robison as president for the fiscal year that will begin on July 1, 2005. Robison has risen through the ranks of IASA holding various management team, leadership and volunteer positions within the association during his many years of volunteering. Currently, he serves as vice president and treasurer of Brotherhood Mutual Insurance Company, a Fort Wayne, Ind., a niche regional P&C carrier insuring America's churches and related ministries. Robison joined Brotherhood in January, 1994. Prior to joining Brotherhood, he worked as a manager for Ernst & Young, LLP serving insurance clients, and also within the firm's information systems consulting practice. Robison is a Certified Public Accountant, a Chartered Property Casualty Underwriter, a Fellow, Life Management Institute and holds the Associate in Insurance Accounting and Finance designation from the Insurance Institute of America.

Washington - The Terrorism Risk Insurance Act (TRIA), a temporary program introduced after the Sept. 11 terrorist attacks, has served its purpose and is probably stunting the development of the private insurance market, Treasury Secretary John Snow wrote in a letter to the Senate Banking Committee summarizing the agency's conclusions regarding TRIA.

Chicago - The third annual study conducted by Chicago-based Foley & Lardner LLP on the costs associated with corporate governance reform shows that the average cost of being public in 2004 increased 33 percent over 2003 for a company with annual revenue under $1 billion.

Washington - The Independent Insurance Agents and Brokers of America, Alexandria, Va., says a proposal to establish an optional federal charter for insurance regulation is not the "best or right solution for regulatory reform in the industry." The association of 300,000 business owners reacted yesterday to a letter sent by 135 insurance, national and regional finance companies to the Senate Banking Committee in support of a charter. "The lack of a federal insurance regulator is especially troublesome," the letter stated. The group asked the Committee to consider the fact that, because insurance is solely regulated by the individual states, "there is no Federal regulatory agency to represent the financial regulatory interests of the U.S. insurance industry."

Oakland, Calif.-A review of hurricane trends by EQECAT Inc. shows a more than a one in three chance of large hurricane catastrophe losses in the United States in the current season, based on current forecasts by the National Hurricane Center (NHC)."Although the current season might not be as severe and unusual as the 2004 season, the potential for large losses in 2005 is likely to be troubling to insurers and reinsurers, which will have to cover the potential hurricane damage claims," says Tom Larsen, senior vice president of EQECAT.

Boston - At the National Association of Insurance Commissioners (NAIC) meeting held here this weekend, the NAIC Property and Casualty Reinsurance Study group approved enhanced disclosure requirements for insurers that utilize reinsurance with limited risk transfer features, also known as finite reinsurance. The use of finite reinsurance has received considerable attention over the past several months, because of its misuse by some high-profile insurers. State insurance regulators, working in a coordinated fashion through the NAIC, have been evaluating existing relevant statutory financial reporting since last year. NAIC Property and Casualty Reinsurance Study Group approved enhanced disclosure requirements for insurers that utilize reinsurance with limited risk transfer features, also known as finite reinsurance. The use of finite reinsurance has received considerable attention over the past several months, because of its misuse by some high-profile insurers. State insurance regulators, working in a coordinated fashion through the NAIC, have been evaluating existing relevant statutory financial reporting since last year. The latest proposed disclosures would require an insurer to report to state insurance regulators any finite reinsurance agreement that has the effect of altering policyholders' surplus by more than three percent, or representing more than three percent of ceded premium or losses. Additional reporting requirements regarding contract terms and management's intention in entering the contract have been included to improve transparency. Study Group members also approved a standard attestation form to be signed by the insurer's CEO and CFO attesting that there are no side agreements and that risk transfer has occurred.

Washington D.C. - The National Association of Insurance Commissioners' (NAIC) plan to apply Sarbanes-Oxley (SOX) corporate disclosure and accounting rules to non-public carriers will take center stage at the National Conference of Insurance Legislators' (NCOIL) Financial Services & Investment Products Committee meeting, which will convene on July 7 from 1:45 to 3:00 p.m., during the NCOIL Summer Meeting in Newport, Rhode Island.

A growing number of insurers are harnessing technology to improve services to customers victimized by identity theft.Some have established outreach programs that give policyholders access to third-party identity theft restoration services. One of them, Columbus, Ohio-based Nationwide Insurance Co., is providing other capabilities as well.

Carriers have been addressing Internet security ever since they realized the public network exposed them to denial of service attacks and theft of policyholder information. Firewalls, intrusion detection, encryption, virus scanning, access management-all these tools are staples in carriers' IT operations.But what about insurance agencies? Carriers exchange customer data with agencies via the Internet daily, and agents regularly access policyholder data within carrier systems.

What are the most important IT considerations for complying with Section 404 of the Sarbanes-Oxley Act of 2002? By July 15, all U.S. companies under $75 million in annual revenue must demonstrate they know the answer to that question, because that's the deadline for complying with Section 404.However, due to the lack of specific directives and knowledge, many companies are struggling with how to reach compliance by that date-let alone wondering how they will afford continued compliance year after year.

New York - Helping members better analyze and report their returns on standards investments, ACORD released a return on investment (ROI) analysis toolset at the 2005 ACORD LOMA Insurance Systems Forum, held in Orlando on May 22-24.

Andover, Mass. - State National Companies, Fort Worth, Texas, has chosen CGI Group Inc., an independent information technology and business process services company, to provide full regulatory and statistical reporting services for their property and casualty book of business. Privately held, State National Companies includes three affiliates: State National Insurance Company, National Specialty Insurance Company and Texas-based State and County Mutual Fire Insurance Company.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) met last week to discuss steps to amend disclosure requirements for insurers that utilize reinsurance with limited risk transfer features, also known as finite reinsurance.

Cleveland - The Compliance Consortium, an international membership organization formed in June 2004 to promote effective governance, risk and compliance management (GRC), has published its operational approach for managing GRC requirements within the enterprise. Applicable to both public and private companies, the framework is designed to assist senior management and boards of directors in setting objectives for managing a wide range of compliance-related activities and instituting the programs needed to attain those objectives. This initial version is a "public draft" and is intended to invite constructive criticism and ultimately to build a broad consensus within the hundreds of companies that have registered as part of The Compliance Consortium community over the past year. Leveraging the guidelines set forth by the U.S. Sentencing Commission, the Consortium has defined seven operational concerns to serve as a framework for organizing and managing GRC operations. These range from clearly assigning responsibilities at all levels of the organization to establishing incentives and discipline to promote compliance The Consortium has developed a list of 12 questions that board members and senior management should ask to help ensure organizations are on track with their GRC objectives."Unquestionably, the passage of the Sarbanes-Oxley Act has increased the focus for public companies on the areas of corporate governance, risk management and compliance," says Ted Frank, chairman of the Compliance Consortium advisory committee and president of Axentis. "It's important to remember that, for many companies, Sarbanes-Oxley is just one of hundreds of mandates from the SEC, FDA and other regulatory bodies that they must manage. Our goal with the creation of this framework is to help all organizations define, execute and ultimately profit from low risk and efficient governance, risk and compliance management, regardless of the specific regulation or statute."

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) is taking steps to amend disclosure requirements for insurers that use reinsurance with limited risk transfer features, also known as finite reinsurance. The use of so-called finite reinsurance has received considerable attention over the past several months, because of its misuse by some high-profile insurers. State insurance regulators, working in a coordinated fashion through the NAIC, have been evaluating existing relevant statutory financial reporting since last fall. The latest proposed disclosures would require an insurer to report to state insurance regulators any agreement that has the effect of altering policyholders' surplus by more than 3%, or representing more than 3% of premium or losses. The new disclosure is also designed to identify any reinsurance contract that has been accounted for differently under statutory accounting principles compared to general financial statement purposes. Additional reporting requirements regarding contract terms and management's intention in entering the contract have been included to improve transparency. The provisions include that there are no separate agreements between the insurer and the reinsurer that could serve to modify the actual or potential losses under the contract, and that the insurer complies with all requirements of NAIC's statement of statutory accounting principle (SSAP) No. 62, "Property and Casualty Reinsurance."Source: NAIC